Assertion (A): The retiring partner or the executors of the deceased partner are entitled to their share of goodwill at the time of retirement or death.
Reason (R): Goodwill is earned by the firm with the efforts of all the existing partners (including the retiring or deceased partner).
Choose the correct option from the following:
Assertion (A): The retiring partner or the executors of the deceased partner are entitled to their share of goodwill at the time of retirement or death.
Reason (R): Goodwill is earned by the firm with the efforts of all the existing partners (including the retiring or deceased partner).
Choose the correct option from the following:
Show Hint
- Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
- Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
- Assertion (A) is correct, but Reason (R) is incorrect.
- Assertion (A) is incorrect, but Reason (R) is correct.
The Correct Option is A
Solution and Explanation
Assertion (A): the retiring partner or the executors of a deceased partner get their share of goodwill. Reason (R): all partners, including the retiring one, helped to build the goodwill.
Step 2: Check Assertion (A):
Goodwill is an asset of the firm. A retiring or deceased partner has a right in all assets, so he must get a share of goodwill. Assertion (A) is correct.
Step 3: Check Reason (R):
Goodwill is built over the years by the work and skill of all partners. The retiring partner was one of them. Reason (R) is correct.
Step 4: Is R the explanation of A:
He is paid for goodwill because he helped to earn it. So R explains A.
Step 5: Why the other options are wrong:
Option (B) says R does not explain A. But the right to goodwill comes from having helped to build it.
Option (C) says R is wrong. R is true.
Option (D) says A is wrong. A is true.
Final Answer:
Both A and R are true and R explains A, option (A).
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