Goodwill of a firm of X and Y is valued at Rs. 30,000. It is appearing in the books at Rs. 12,000. Z is admitted for 1/4 share. What amount he is supposed to bring for goodwill?
Last updated Jun 24, 2026
Correct Answer:
Option C —
7,500
Explanation of the Logic
When a new partner joins a business, they must pay for their portion of the firm's total value. Here is how the calculation works in plain terms:
Total Current Value: The firm’s goodwill is currently valued at thirty thousand rupees.
The Share: Partner Z is joining for a one-fourth share of the business.
The Calculation: To find Z's contribution, you take the total value of thirty thousand and divide it into four equal parts. One of those four parts equals seven thousand five hundred.
Regarding the Book Value:
The twelve thousand rupees already recorded in the books is considered "Old Goodwill." In accounting practice, this amount is typically handled by the original partners (X and Y) before the new person joins. It does not change the fact that Z must pay for one-fourth of the current, actual value of thirty thousand.
Answer verified by Quintessence Classes faculty — Karan Nagar, Srinagar.
