Asha and Nisha are partner’s sharing profit in the ratio of 2:1. Asha’s son Ashish was admitted for 1/4 share of which 1/8 was gifted by Asha to her son. The remaining was contributed by Nisha. Goodwill of the firm in valued at Rs. 40,000. How much of the goodwill will be credited to the old partner’s capital account.
Explanation
Option B is correct because the goodwill is adjusted by crediting the sacrificing partners in their sacrificing ratio. The context explains that goodwill adjustments involve crediting sacrificing partners. Ashish's share of goodwill is 1/4 of Rs. 40,000, which equals Rs. 10,000. Asha and Nisha both sacrificed 1/8 share each to make up Ashish's 1/4 share, resulting in a sacrificing ratio of 1:1. Therefore, the Rs. 10,000 goodwill is split equally between them.
Solution Steps
Step 1: Calculate the new partner's share of goodwill. Ashish's share is 1/4. Goodwill of the firm is Rs. 40,000. Ashish's share of goodwill = 1/4 * Rs. 40,000 = Rs. 10,000.
Step 2: Determine the sacrificing ratio. Ashish acquired 1/4 share in total. Asha gifted 1/8 share. Nisha contributed the remaining 1/8 share (1/4 - 1/8). Thus, both Asha and Nisha sacrificed 1/8 share each. The sacrificing ratio is 1/8 : 1/8 = 1:1.
Step 3: Calculate the amount credited to old partners. The total goodwill to be credited is Rs. 10,000. Distributing this in the sacrificing ratio (1:1): Asha's Credit = Rs. 10,000 * 1/2 = Rs. 5,000. Nisha's Credit = Rs. 10,000 * 1/2 = Rs. 5,000.