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
Dear student
This is the question of hidden goodwill.
Firms's capital on the basis of C's capital = 400000*5/1 = 2000000
Combined firm's capital = 1000000
Goodwill = 2000000 - 1000000 = 1000000
C's goodwill = 1000000*1/5 = 200000
Regards
This is the question of hidden goodwill.
Firms's capital on the basis of C's capital = 400000*5/1 = 2000000
Combined firm's capital = 1000000
Goodwill = 2000000 - 1000000 = 1000000
C's goodwill = 1000000*1/5 = 200000
Regards