Question

p ,q and r are partners in a firm goodwill has been valued at 36000 on R's retirement from the firm ,p and q agree to share profit in the ratio of 3:2 pass necessary journal entry for treatment of R's share of goodwill​

Answer 1

Answer:

share of R = 36,000×1/3 = 12,000

gain = new share - old share

P = 3/5 - 1/3 = 4/15

Q = 2/5 - 1/3 = 1/15

gaining ratio = 4:1

P's capital account..... Dr. 9600

Q's capital account..... Dr 2400

to R's capital account 12,000

Answer 2

Answer:

P's capital account(Debit)  Dr. 9600

Q's capital account(Debit) Dr 2400

       To R's capital account(Credit)  12,000

Explanation:

Profit sharing ratio = P:Q:R = 1:1:1

Share of R = Goodwill x Profit share of R

Share of R = $36,000*\frac{1}{3}$

Share of R$= 12,000$

Gaining ratio of P and Q after R's retirement

Gaining Ratio = new share - old share

P = $\frac{3}{5} -\frac{1}{3} = \frac{4}{15}$

Q= $\frac{2}{5} -\frac{1}{3} = \frac{1}{15}$

Gaining Ratio = 4:1

Journal Entry:

P's capital account(Debit)  Dr. 9600

Q's capital account(Debit) Dr 2400

       To R's capital account(Credit)  12,000

Definition:

Goodwill:

• When a buyer purchases an established firm, goodwill, which is an intangible asset in accounting, is created.
• Assets that are not individually identifiable makeup goodwill.
• Regardless of whether the company plans to do so, identifiable assets that can be sold, transferred, licensed, rented, or exchanged alone or in combination with a linked contract, identifiable assets, or liability are not included in goodwill.
• Additionally, contractual rights, other legal responsibilities, and other rights and liabilities, whether they are a part of the organization or not, are not included in goodwill.

#SPJ2