A and B are partners in a firm. They admit C as a partner with 1/5th share in the profits of the firm. C brings ₹ 4,00,000 as his share of capital. Calculate the value of C’s share of Goodwill on the basis of his capital, given that the combined capital of A and B after all adjustments is ₹ 10,00,000
Answers
The value of C's share will be - Rs. 2,80,000.
Explanation:
1. Capital by C is 4 lakhs.
2. Capital by A and B is 10 lakhs.
3. Total capital of firm is 14 lakhs.
4. C was promised 1/5th share in the firm.
5. Thus, 1/5*(1400000) is 2,80,000.
6. Hence, C's share is Rs. 2,80,000.
The value of C’s share of Goodwill on the basis of his capital is $120,000
Explanation:
For determining the C's share, first we have to find out the goodwill amount which is come from
Goodwill = Total capital - actual capital
where,
Total capital = ₹4,00,000 × 5 = ₹20,00,000
And, the actual capital equal to
= ₹4,00,000 + ₹10,00,000
= ₹14,00,000
So, the goodwill equal to
= ₹20,00,000 - ₹14,00,000
= ₹6,00,000
The C share is
= ₹6,00,000 ÷ 5
= ₹1,20,000
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