P, Q and R are partners in a firm sharing profits in the ratio of 3:2:1. R retires, and the balance in his capital account after making necessary adjustments on account of reserves, revaluation of assets and liabilities etc is workout to be Rs. 60,000. P and Q agreed to pay him Rs. 75,000 in full settlement of his claim. What will be the value of goodwill of the firm?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 90,000
When a retiring partner is paid a lump sum, anything paid above the balance in his capital account is his share of goodwill. This is called hidden goodwill. Dividing that share by his profit share gives the goodwill of the whole firm.
R's share of goodwill = Rs. 75,000 − Rs. 60,000 = Rs. 15,000
R's profit share = 1/6
Goodwill of the firm = Rs. 15,000 ÷ 1/6 = Rs. 15,000 × 6 = Rs. 90,000
Rs. 15,000 is only R's share, not the goodwill of the firm, which the question asks for.
Note: This question is from NCERT (2026-27). NTA sets numerical questions from NCERT too, so do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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