Ram and Shyam are partners in a firm with capital of ₹ 4,80,000 and ₹ 3,10,000, respectively. They admitted Ganesh as a partner with $\frac{1}{4}$th share of profit. Ganesh brings ₹ 3,00,000 as his capital. Ganesh's share of goodwill will be
Identify the crucial details from the question:
The goodwill brought by a new partner is calculated based on the firm's valuation. Here’s how:
This is calculated based on the new partner's capital contribution and their share in the firm's profits.
If Ganesh's capital of ₹ 3,00,000 represents his 1/4 share, the total capital of the firm is implied as:
$ \text{Implied Total Capital} = \frac{\text{Ganesh's Capital}}{\text{Ganesh's Profit Share}} $
$ \text{Implied Total Capital} = \frac{₹ 3,00,000}{1/4} = ₹ 3,00,000 \times 4 = ₹ 12,00,000 $
Sum the capital contributions of all partners (existing and new).
$ \text{Total Contributed Capital} = \text{Ram's Capital} + \text{Shyam's Capital} + \text{Ganesh's Capital} $
$ \text{Total Contributed Capital} = ₹ 4,80,000 + ₹ 3,10,000 + ₹ 3,00,000 = ₹ 10,90,000 $
The difference between the implied total capital and the total contributed capital represents the firm's total goodwill.
$ \text{Total Goodwill} = \text{Implied Total Capital} - \text{Total Contributed Capital} $
$ \text{Total Goodwill} = ₹ 12,00,000 - ₹ 10,90,000 = ₹ 1,10,000 $
Ganesh's share of goodwill is his profit-sharing ratio applied to the total goodwill of the firm.
$ \text{Ganesh's Share of Goodwill} = \text{Ganesh's Profit Share} \times \text{Total Goodwill} $
$ \text{Ganesh's Share of Goodwill} = \frac{1}{4} \times ₹ 1,10,000 = ₹ 27,500 $
Ganesh's share of goodwill amounts to ₹ 27,500.
X and Y are partners sharing profits and losses in the ratio of 3 ∶ 2. They admit Z as a new partner with 1/5 share in the profits. Calculate the new profit sharing ratio of the partners.