Question : A, B and C were partners sharing profits in the proportion of one-half, one-fourth and one-fourth respectively. As at March 31, 2018 A’s capital Rs 1,00,000 and A’s loan account (debit Balance ) Rs 30,000. A died on 1st April, 2018. According to the partnership agreement, the goodwill was to be calculated at two year’s purchases of average profits of three completed years preceding the death or retirement of a partner. The deceased partner’s share of capital and goodwill, etc., was paid out in cash on 4th April, 2018, the available cash balance being supplemented by a loan from the firm’s banker on the security of the freehold property. The net profits of the years ending 31st March, 2016, 2017 and 2018 were Rs.55,000, Rs.48,000 and Rs.65,000 respectively.
Q. Amount of goodwill will be --------
Option 1: Rs 1,12,000
Option 2: Rs 56,000
Option 3: Rs 1,68,000
Option 4: None of the above
Correct Answer: Rs 1,12,000
Solution :
Total Profit of Last of 3 years
= 55000 + 48000 + 65000
= 1,68,000
Average Profit = 1,68,000/3 = 50000
Goodwill = 56000 × 2 = Rs 1,12,000.
Hence, the correct option is 1.
