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Question : P , Q and R  were partners. Their partnership deed provided that they were to share profits thus; P 26 per cent; Q 34 per cent; R  40 per cent; and that if a partner died, his capital should remain in the business for a stated period at a fixed rate of interest, but that the deceased partner’s share should be credited with an amount for Goodwill, based upon  one and a half year’s average profits, for the five years prior to his death, but be subject to deduction of 5 per cent from the book debts. R  died, and the profits of the firm for five years were agreed at Rs.20,000; Rs.30,000; Rs. 15,000 (loss); Rs.5,000 (loss); and Rs.45,000 respectively. Book Debts stood at Rs.90,000.
Q. Net goodwill Rs ---

Option 1: Rs 22,500

Option 2: Rs 18,000

Option 3: Rs 20,000

Option 4: Rs 14,500


Team Careers360 14th Jan, 2024
Answer (1)
Team Careers360 15th Jan, 2024

Correct Answer: Rs 18,000


Solution : Answer = Rs 18,000

Total profit = 20,000 + 30,000 + (-15000) + (-5000) + 45000 = 75000

Average profit = 75000/ 5 = 15000

Goodwill = 15000 x 1.5 = 22500

Total Goodwill Rs.22,500
Net Goodwill = 22,500 - 4,500 (5% of Book Debts) = Rs. 18,000
Hence, the correct option is 2.

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