A, B and C were partner's in a firm sharing profit and losses in the Ratio of 5 : 3 : 2. They admitted D into partnership for 1/5 share of profit which he takes equally from A and B. D brought sufficient amount of goodwill in cash Capital brought in by is Rs. 50,000. On the date of admission the Balance Sheet of A, B and C was as follows :
Balance Sheet as on 31st March, 2021
| Liability | Rs. | Assets | Rs. |
|---|---|---|---|
| Capital | Building and Furniture | 1,50,000 | |
| A 1,00,000 | Debtors 55,000 | ||
| B 60,000 | Provision 5,000 | 50,000 | |
| C 40,000 | 2,00,000 | Cash | 20,000 |
| Creditors | 50,000 | Profit and Loss (2020-21) | 30,000 |
| 2,50,000 | 2,50,000 |
Goodwill is to be valued at 3 years purchase of average profit of last 4 years which were Rs. 60,000 (2017-18), Rs. 60,000 (18-19), Rs. 30,000 (19-20). On revaluation it was found that all debtors are good.
Goodwill brought in by new partners would be ________.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Distributed to only A and B in Sacrificing Ratio
The goodwill (premium) brought in by the new partner compensates the partners who give up part of their share for him. D takes his share only from A and B, so only they sacrifice, in the ratio 1 : 1.
Option (1) Distributed to A, B and C in old Ratio — Incorrect. The old ratio would also give a share to C, who has given up nothing.
Option (2) Distributed to A, B and C in Sacrificing Ratio — Incorrect. C gives up nothing, so C is not a sacrificing partner and gets no share of the premium. Only A and B sacrifice (1 : 1), which is what Option (3) says. Option (2) wrongly brings C into the sharing.
Option (3) Distributed to only A and B in Sacrificing Ratio — Correct. A and B share the premium in their sacrificing ratio, 1 : 1.
Option (4) Distributed to A, B and C in new Profit Sharing Ratio — Incorrect. The new ratio decides future profits; it is not used to share the premium for the sacrifice already made.
NCERT (2026-27 edition): |