Question

Piyush, Rajesh, and Avinash were partners in a firm sharing profits and losses equally. Shiva was admitted as a new partner for an equal share. Shiva brought his share of capital and premium for goodwill in cash. The premium for goodwill amount will be divided among:

• A. Old partners in old ratio
• B. New partners in new ratio
• C. New partners in sacrificing ratio
• D. Old partners in sacrificing ratio

Hint:

Goodwill is compensated to the sacrificing partners based on the proportion of their sacrificed shares.

Answer 1

The Correct Option is D

The goodwill is distributed among the existing partners based on their sacrificing ratio. The sacrificing ratio is calculated as: Old ratio - New ratio. Given that profits were previously shared equally, the sacrificing ratio is 1:1:1.