When The Goodwill Is Already Appearing In The Books

When Goodwill Does Not Appear In The Books

Hidden Goodwill

Mohan Lal and Sohan Lal were partners in a firm sharing profits and losses in 3:2 ratio. They admitted Ram Lal for 1/4 share on 1.1.2013. It was agreed that goodwill of the firm will be valued at 3 years purchase of the average profits of last 4 years which were Rs. 50,000 for 2013, Rs. 60,000 for 2014, Rs. 90,000 for 2015 and Rs. 70,000 for 2016. Ram Lal did not bring his share of goodwill premium in cash. Record the necessary journal entries in the books of the firm on Ram Lal’s admission when: (a) Goodwill already appears in the books at Rs. 2,02,500. (b) Goodwill appears in the books at Rs. 2,500. (c) Goodwill appears in the books at Rs. 2,05,000.

Ram and Rahim are partners in a firm sharing profits and losses in the ratio of 3:2. Rahul is admitted into partnership for 1/3 share in profits. He brings in Rs. 10,000 as capital, but is not in a position to bring any amount for his share of goodwill which has been valued at Rs. 30,000. Give necessary journal entries under each of the following situations: (a) When there is no goodwill appearing in the books of the firm, (b) When the goodwill appears at Rs 15,000 in the books of the firm, and (c) When the goodwill appears at Rs. 36,000 in the books of the firm.

A and B are partners in a firm sharing profits and losses in the proportion of 3/4th and 1/4th respectively. On 1st April, 2019, they take C into partnership for 1/5th share of profits. C acquires his share from A and B in the ratio of 2 : 1. Value of goodwill is determined at RS 24,000. At present, C is not in a position to bring amount towaerds goodwill. Give necessary Journal entries under the following alternative cases: Case 1. When the Goodwill Account appeare at RS 10,000 in the books of the firm. Case 2. When Goodwill Account is not appearing in the books of the firm.