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Question : X and Y are partners sharing profits and losses in the ratio of 3 : 2. They admit Z into partnership with 1/5th share in profits which he acquires equally from X and Y. Z brings in Rs.40,000 as goodwill in cash. Goodwill amount will be credited to -

Option 1: X: Rs.25,000; Y: Rs.15,000

Option 2: X: Rs.4,000; Y: Rs.4,000

Option 3: X: Rs.20,000; Y: Rs.20,000

Option 4: X: Rs.24,000; Y: Rs.16,000


Team Careers360 7th Jan, 2024
Answer (1)
Team Careers360 20th Jan, 2024

Correct Answer: X: Rs.20,000; Y: Rs.20,000


Solution : The current elderly partners in a partnership firm lose their portion of the profits when a new partner is accepted. Old partners may have experienced a loss in the old profit-sharing ratio or in another ratio. Sacrifice is the difference between what one received in the past and what one receives now. The term "Sacrificing Ratio" refers to the ratio used to indicate the individual sacrifice of two or more partners.

Hence The sacrificing ratio of X and Y is 1 : 1 .

Amount of goodwill credited to X's Capital Account = 40000 * 1/2  = Rs.20000

Amount of goodwill credited to Y's Capital Account = 40000 * 1/2  = Rs.20000

Hence the correct answer is option 3.

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