A & B are partners sharing profits in 4:1. Their capitals are ₹75,000 & ₹85,000 respectively. They admit C for 1/3rd share who brought ₹1,00,000 as his capital. Calculate the firm's goodwill?

₹40,000

The correct answer is option 3- ₹40,000.

C share is 1/3 for which capital is ₹1,00,000
Remaining share after C = 1-1/3
                                       = 2/3

On C base, total capital should be = 1,00,000 X 3/1
                                                       = ₹3,00,000

But capital of A & B = 75,000 + 85,000
                               = 1,60,000

Total capital of the firm = 1,60,000 + 1,00,000
                                     = 2,60,000

Goodwill = 3,00,000 - 2,60,000
              = ₹40,000