A and B are partners, they admit C into partnership. C was asked to pay ₹2,50,000 though his share of capital was estimated ₹2,00,000 only. For what ₹50,000 extra was asked from C?

Goodwill

The correct answer is option 4- Goodwill.

₹50,000 extra was asked from C is for Goodwill.

For the right to acquire share in the assets and profits of the partnership firm, the partner brings an agreed amount of capital either in cash or in kind. Moreover, in the case of an established firm which may be earning more profits than the normal rate of return on its capital the new partner is required to contribute some additional amount known as premium or goodwill. This is done  primarily to compensate the sacrificing partners for loss of their share in super profits of the firm.