A and B are partners sharing profits and losses in the ratio of 3 : 2. C is admitted into partnership for 1/5th share in profit. He pays ₹1,00,000 as goodwill. The ratio of the partners A, B and C in the new firm would be 3 : 1 : 1. Goodwill will be credited to which partner account?
Answer & explanation
Correct answer: option 2
The premium for goodwill is given only on the sacrifice made by the old partner in their Sacrificing ratio.
Sacrifice ratio = Old ratio - New ratio
A's Sacrifice = 3/5 - 3/5 = 0/5
B's Sacrifice = 2/5 - 1/5 = 1/5
Here, A has not sacrifice anything and havenot gain anything. Therefore the amount of goodwill i.e ₹ 1,00,000 will be given to B only.