Multiple choice

The capital of B and D are Rs,60,000 and Rs.30,000 respectively with the profit sharing ratio 3 : 1.The new ratio , admissible after 01.04.2006 is 5 : 3. The goodwill is valued Rs.40,000 as on that date. Amount payable by a gaining partner to a scarifying partner will be (without opening Goodwill A/c) _____________.

  1. B will pay to D Rs.5,000

  2. D will pay to B Rs.5,000

  3. B will pay to D Rs.40,000

  4. D will pay to B Rs.40,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Old ratio B:D = 3:1. New ratio B:D = 5:3. B's sacrifice = 3/4 - 5/8 = 6/8 - 5/8 = 1/8. D's gain = 3/8 - 1/4 = 3/8 - 2/8 = 1/8. Goodwill = 40,000. D pays B = 1/8 * 40,000 = 5,000.

AI explanation

Using the gaining ratio formula, B's gain is calculated as 5/8 minus 3/4, which equals negative 1/8, showing a sacrifice. D's gain is 3/8 minus 1/4, which equals 1/8. Because the goodwill is Rs 40,000, D's share of the gain is 1/8 of Rs 40,000, equaling Rs 5,000. D will pay to B Rs 5,000.

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