Sun and Star were partners in a firm sharing profits in the ratio of 2:1.
Moon was admitted as a new partner in the firm. New profit sharing
ratio was 3:3:2. Moon brought the following assets towards his share of
goodwill and his capital :
Machinery
Furniture
Stock
Cash
If his capital is considered as
(A) 5 70,000
(B) * 2,80,000
(C) = 4,50,000
(D) 31,40,000
2,00,000
1,20,000
80,000
50,000
3,80,000, the goodwill of the firm will be :
ahoring profits and losses in the rati
Answers
The goodwill of the firm should be Rs.70,000.
Explanation:
Total Assets brought in by Moon =
= Rs.4,50,000
Amount of Capital brought in by Moon = Rs.3,80,000
Goodwill amount brought in by Moon = Total Assets brought in by moon - Moon's Capital
Goodwill =
= Rs.70,000.
*Therefore,as per the above calculation,Goodwill should be Rs.70,000.
*The options given in the question have been typed wrong.
The first option should be Rs.70,000 instead of Rs.570000.
If,however,the options are correct then the question should be considered as wrong.
Correct question:
Sun and Star were partners in a firm sharing profits in the ratio of 2:1. Moon was admitted as a new partner in the firm. Th new profit-sharing ratio was 3:3:2. Moon brought the following assets towards his share of goodwill and his capital:
- Machinery - Rs 2,00,000
- Furniture - Rs 1,20,000
- Stock - Rs 80,000
- Cash - Rs 50,000
If his capital is considered as 3,80,000, the goodwill of the firm will be:
(A) Rs 70,000
(B) Rs 2,80,000
(C) Rs 4,50,000
(D) Rs 1,40,000
Answer:
When the premium for goodwill is brought in kind (consideration other than cash), the goodwill is calculated as:
Goodwill = Total assets - Capital brought in
Total assets = Machinery + Furniture + Stock + Cash
Total assets = Rs 2,00,000 + Rs 1,20,000 + Rs 80,000 + Rs 50,000
Total assets = Rs 4,50,000
Capital brought in by the partner, as per the question = Rs 3,80,000
Goodwill = Rs 4,50,000 - Rs 3,80,000
Goodwill = Rs 70,000
Therefore, the goodwill is (A) Rs 70,000.
Accordingly, an entry is passed for the same as follows:
Machinery A/c ... Dr - Rs 2,00,000
Furniture A/c ... Dr - Rs 1,20,000
Stock A/c ... Dr - Rs 80,000
Cash A/c ... Dr - Rs 50,000
- To Moon's capital A/c - Rs 3,80,000
- To premium for goodwill A/c - Rs 70,000
(Being the capital and the premium for goodwill brought in by the new partner.)
The premium is then distributed among the old partners in their sacrificing ratio [Old ratio - New ratio].