3. X and Z were partners in a firm with capitals of ₹45,000 each. They admitted Y as a new partner for 1/3 share in the profits of the firm. Y brought ₹60,000 as his capital. Based on Y's share in the profits of the firm and his capital contribution, the goodwill of the firm will be:
a. ₹90,000
b. ₹1,50,000
c. ₹1,80,000
d. ₹30,000
4. On reconstitution of a firm, the value of machinery was depreciated by ₹1,00,000 and investments increased to ₹70,000 from ₹20,000. Gain or loss on revaluation will be:
a. Gain ₹50,000
b. Loss ₹1,50,000
c. Loss ₹50,000
d. Gain ₹1,50,000
Answer (2)
Let's go through the questions step-by-step.
Question 1 : Determining the Goodwill of the Firm
X and Z are existing partners with capitals of ₹45,000 each.
Y is admitted for a 1/3 share in the profits, bringing in ₹60,000 as capital.
To calculate the goodwill of the firm:
Y's capital contribution is ₹60,000 for a 1/3 share.
Therefore, the implied capital of the firm based on Y's share can be estimated with the equation:
Implied Total Capital = Contribution by Y × 1 3 = 60 , 000 × 3 = 1 , 80 , 000
The existing total capital of X and Z is ( 45 , 000 + 45 , 000 = 90 , 000 ) .
Hence, Goodwill = Implied Total Capital - Existing Capital = ( 1 , 80 , 000 − 90 , 000 = 90 , 000 ) .
Thus, the answer is option a. ₹90,000 .
Question 2 : Gain or Loss on Revaluation
The value of the machinery depreciated by ₹1,00,000.
Investments increased to ₹70,000 from the original ₹20,000.
To find the net gain or loss:
Depreciation of Machinery = Loss of ₹1,00,000.
Increase in Investments = Gain of ( 70 , 000 − 20 , 000 = 50 , 000 ) .
Net Gain/Loss on Revaluation = Gain from Investments - Loss from Machinery
= 50 , 000 − 1 , 00 , 000 = − 50 , 000
This results in a Net Loss of ₹50,000.
So, the answer is option c. Loss ₹50,000 .
The goodwill of the firm is calculated to be ₹90,000 based on Y's contribution and share. The revaluation of assets leads to a net loss of ₹50,000 due to the depreciation of machinery and the increase in investments. Therefore, the answers are option a for goodwill and option c for loss on revaluation.
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