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A and B are partners with capitals of rs 90,000 & rs 1,00,000 respectively . They decide toadmit C into the partnership for the 1/4 share in future profits. C is to bring in sum of rs 80,000 as his capita . Calculate the amount of goodwill .Profit&loss (Cr) 10,000 and advertisement suspense rs 20,000

A and B are partners with capitals of rs 90,000 & rs 1,00,000 respectively . They decide toadmit C into the partnership for the 1/4 share in future profits. C is to bring in sum of rs 80,000 as his capita . Calculate the amount of goodwill .Profit&loss (Cr) 10,000 and advertisement suspense rs 20,000 -03 $ 03

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Total capital of the firm based on new partner's capital contribution of 80,000 for 1/4th of share.
80,000 x 4 / 1 = 3,20,000

Actual total capital of the firm = 90,000 + 1,00,000 + 10,000 - 20,000 + 80,000 = 2,60,000

Hidden goodwill of the firm = 3,20,000 - 2,60,000 = 60,000
 
 
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