Question

Anchal, Prabhat and Karan were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. On 31st March, 2025, Anchal retired. The balance in her capital account after making the necessary adjustments on account of reserves and revaluation of assets and reassessment of liabilities was ₹ 5,10,000. Anchal was paid ₹ 5,90,000 in full settlement of her claim. The value of goodwill of the firm on the date of Anchal’s retirement was :

• A. ₹ 80,000
• B. ₹ 5,10,000
• C. ₹ 5,90,000
• D. ₹ 1,60,000

Hint:

On retirement, if the amount paid to retiring partner exceeds their capital balance (after all adjustments), the excess represents their share of goodwill. \[ \text{Total Goodwill} = \frac{\text{Excess Amount}}{\text{Retiring Partner's Share}} \] Remember: The excess is the retiring partner's share of goodwill, not the total goodwill!

Answer 1

The Correct Option is D

We need to find the value of goodwill of the firm on Anchal's retirement date.
Step 1: Understand the situation.

• Anchal's capital account balance after adjustments = ₹ 5,10,000
• Amount paid to Anchal in full settlement = ₹ 5,90,000
• The excess amount paid over her capital balance represents her share of goodwill (since other adjustments are already made)

Step 2: Calculate the excess amount paid.
\[ \text{Excess} = \text{Amount paid} - \text{Capital balance} \] \[ \text{Excess} = 5,90,000 - 5,10,000 = ₹ 80,000 \] This excess of ₹ 80,000 represents Anchal's share of goodwill. Step 3: Calculate the total goodwill of the firm.
Anchal's profit sharing ratio = 3 out of total 3+2+1 = 6 parts \[ \text{Anchal's share} = \frac{3}{6} = \frac{1}{2} \] If ₹ 80,000 is Anchal's share of goodwill (which is half of the total goodwill), then: \[ \text{Total Goodwill} = 80,000 \times 2 = ₹ 1,60,000 \] Step 4: Verify.
Total goodwill = ₹ 1,60,000
Anchal's share (1/2) = ₹ 80,000
Amount paid to Anchal = Capital (5,10,000) + Goodwill share (80,000) = ₹ 5,90,000 ✓ Final Answer: (D) ₹ 1,60,000