Question

Manas and Ranvir are partners in a firm having capital balances of ₹1,20,000 and ₹80,000 respectively. Sanju is admitted as a new partner in the firm for a 1/5 share in future profits. Sanju brought ₹1,00,000 as his capital. The goodwill of the firm on Sanju’s admission will be:

• A. ₹5,00,000
• B. ₹2,00,000
• C. ₹3,00,000
• D. ₹1,00,000

Hint:

Goodwill is calculated as the difference between the total capital inferred from the new partner’s contribution and the existing combined capital of the old partners.

Answer 1

The Correct Option is B

To ascertain the firm's goodwill upon Sanju's admission, execute the subsequent steps:Step 1: Determine the firm's total capital predicated on Sanju's ownership stake.Sanju's profit share is established as $\frac{1}{5}$. Consequently, the firm's total capital is computed as follows:\[\text{Total Capital of the Firm} = \frac{\text{Sanju’s Capital}}{\text{Sanju’s Share}} = \frac{₹1,00,000}{\frac{1}{5}} = ₹5,00,000.\]Step 2: Calculate the aggregated capital of the incumbent partners.The combined capital of Manas and Ranvir is determined as:\[\text{Combined Capital} = ₹1,20,000 + ₹80,000 = ₹2,00,000.\]Step 3: Compute the firm's goodwill.The firm's goodwill is derived from the disparity between the total firm capital and the combined capital of the existing partners:\[\text{Goodwill} = \text{Total Capital of the Firm} - \text{Combined Capital of Existing Partners}.\]\[\text{Goodwill} = ₹5,00,000 - ₹2,00,000 = ₹3,00,000.\]Final Answer: The calculated goodwill of the firm upon Sanju's admission amounts to \( \boxed{₹3,00,000} \).