A and B are partners sharing profits in the ratio of 7 : 5. C is admitted into the partnership for 1/6th share which he acquires 1/24th from A and 1/8th from B. C does not pay anything for his share of goodwill. On C’s admission firm’s goodwill was valued at ₹1,80,000. Credit will be given to which partner?
Answer & explanation
Correct answer: option 2
C's goodwill = 1,80,000x1/6 = 30,000
A's sacrifice is 1/24 and B's sacrifice is 1/8.
Sacrificing ratio is 1/24 :1/8 or 1:3
A = 30,000 x 1/4= 7500
B = 30,000 x 3/4= 22,500