A & B are partners sharing profits in ratio of 1:2. Their fixed capitals were ₹2,00,000 & ₹3,00,000 respectively. C was admitted with 1/4th share and brought ₹2,00,000 for his capital which was also kept fixed. C acquired his share of profit from B.

Calculate C's share of goodwill?

₹25,000

The correct answer is option 1- ₹25,000.

Total capital of firm = ₹7,00,000
On basis of C's share, the capital of the firm should be = 2,00,000*4
                                                                                      = ₹8,00,000

So, goodwill of firm = 8,00,000-7,00,000
                               = ₹1,00,000

C's share = 1,00,000*1/4
                = ₹25,000