Multiple choice

Neeraj & Gopi are partners with Rs. 5,00,000 capital each. They admitted Champak for 1/4th share with Rs. 8,00,000 capital. The P & L A/c credit balance is Rs. 4,00,000. Find the amount of hidden goodwill.

  1. Rs. 10,00,000

  2. Rs. 12,00,000

  3. Rs. 8,00,000

  4. Rs. 16,00,000

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Total capital required for 1/4 share = 8,00,000 * 4 = 32,00,000. Existing capital = 5,00,000 + 5,00,000 + 8,00,000 + 4,00,000 (reserves) = 22,00,000. Hidden goodwill = 32,00,000 - 22,00,000 = 10,00,000.