Riya and Kiya are partners in a firm sharing profits in the ratio of 3:2. Their capitals were Rs. 80,000 and Rs. 50,000 respectively. They admitted Siya on Jan. 1, 2025 as a new partner for 1/5th share in the future profits. Siya brought Rs. 60,000 as his capital and the necessary amount of goodwill. Calculate Siya's share of goodwill.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 22,000
The value of goodwill is not given here, so it has to be inferred from the capital the new partner brings in and the share he gets — the case of hidden goodwill.
- Siya brings Rs. 60,000 for a 1/5th share, so on that basis the total capital of the new firm should be 60,000 × 5 = Rs. 3,00,000
- Actual combined capital = Riya 80,000 + Kiya 50,000 + Siya 60,000 = Rs. 1,90,000
- Hidden goodwill of the firm = 3,00,000 − 1,90,000 = Rs. 1,10,000
- Siya’s share of goodwill = 1/5 × 1,10,000 = Rs. 22,000