[ISC] Q. 7 Solution of Death of Partner TS Grewal ISC 2023-24 Edition

Pawan, Raman and Sharman were partners sharing profits in the ratio of 4/8, 3/8 and 1/8. It is provided in the Partnership Deed that on the death of any partner, partner’s share of the goodwill is to be valued at one-half of the net profit credited to his account during the last four completed financial years.

Raman died on 1st April, 2022. Firm’s profits and losses for the last 4 financial years were: 2018–19 (Profit ₹ 1,20,000); 2019–20 (Profit ₹ 60,000); 2020–21 (Loss ₹ 20,000) and 2021–22 (Profit ₹ 80,000).

1. (i) Determine the amount that should be credited to Raman for his share of goodwill.
2. (ii) Pass a Journal entry for the adjustment of Goodwill when profit-sharing ratio between Pawan and Sharman in future will be 3 : 2. Show your workings clearly.