Question

Ram and Rahim are partners in a firm sharing profits in the ratio of 3:2. Their capitals were Rs.80000 and Rs.50000 respectively. They admitted Syam on January 1^st 2014 as a new partner for 1/5 share in the future profits. Syam bought Rs.60,000 as his capital. Calculate the value of goodwill of the rm.

Answer 1

Syam’s capital = 60000 

Syam’s share of capital = \(\frac{1}{5}\)

Total capital of new firm = 60000 × \(\frac{5}{1}\) = 300000 

Total capital of Ram, Rahim & Syam = 80000 + 50000 + 60000 = 190000

Goodwill of the firm = 300000 – 190000 = 110000 

Syam’s share of goodwill = 110000 × \(\frac{1}{5}\) = Rs.22,000.