Goodwill of a firm of X and Y is valued at ₹ 30,000. It is appearing in the books at ₹ 12,000. Z is admitted for 1/4 share. What amount he is supposed to bring for goodwill?

Correct option is C

The correct answer is (c) ₹ 7,500.
When a new partner is admitted, their share of goodwill is calculated based on the current valued figures, not the book value. Existing goodwill appearing in the books (₹ 12,000) is generally written off among old partners. Z’s share is calculated as:
Z’s share of goodwill =  1/4×30,000= ₹7,500.
Information Booster
· Current Valuation: Goodwill is revalued at the time of admission to ensure the new partner pays for the actual reputation earned.
· Accounting Treatment: The incoming partner brings "Premium for Goodwill" to compensate sacrificing partners.
· AS-26 Compliance: Only purchased goodwill is recorded in books; self-generated goodwill is adjusted through capital accounts.
· Old Goodwill: The ₹ 12,000 already in books must be debited to X and Y in their old ratio.