Vanshika and Shikha were partners in a firm with capitals of

39 :- Vanshika and Shikha were partners in a firm with capitals of Rs 1,00,000 and Rs 80,000 respectively. They admitted Nisha on 1st April, 2022 as a new partner for 1/4th share in the future profits of the firm. Nisha brought Rs 90,000 as her capital. Nisha acquired her share equally from Vanshika and Shikha.
Calculate the value of goodwill of the firm and pass necessary Journal entries on Nisha’s admission, assuming that Nisha did not bring her share of goodwill premium in cash. Show the working clearly.

Solution :-

Calculation of hidden goodwill
Total capital of the firm as per Nisha’s capital                   90,000 x 4                          3,60,000
Less: total capital of partners                               1,00,000 + 80,000 + 90,000            2,70,000
HIDDEN GOODWILL                                                                                                      90,000

Calculation of share of goodwill
Amount to be brought by Nisha  = 90,000 x 1/4  = Rs 22,500
Vanshika’s share = Rs 11,250 (22,500 x 1/2)
Shikha’s share = Rs 11,250 (22,500 x 1/2)