Gce Model Questions Vol1 2021 Financial Accounting Question 18

Practice objective / multiple choice question 18 from the 2021 Gce Model Questions Vol1 Financial Accounting examination.

Gce Model Questions Vol1 2021 Financial Accounting Objective / Multiple Choice Hard Difficulty
Question 18 GCE_MODEL_QUESTIONS_VOL1 • 2021 • FINANCIAL_ACCOUNTING • objective

Partners A and B currently share profit in the ratio 3:2. Their capital balances are \(A: ₦120,000\) and \(B: ₦80,000\). Before admitting a new partner C, the partnership revalues a building from its book value of \(₦150,000\) to a market value of \(₦210,000\). The revaluation surplus is shared in the existing profit‑sharing ratio. After the revaluation, C is admitted, contributing \(₦100,000\) for a 25 % interest in the partnership. The profit‑sharing ratio after admission becomes A:B:C = 2:1:1. Determine (a) the amount of goodwill recorded, and (b) the cash each existing partner (A and B) receives from C as part of the admission.

Answer Options

A. Goodwill ₦160,000; A receives ₦96,000; B receives ₦64,000
Correct Answer B. Goodwill ₦140,000; A receives ₦84,000; B receives ₦56,000
C. Goodwill ₦120,000; A receives ₦72,000; B receives ₦48,000
D. Goodwill ₦140,000; A receives ₦70,000; B receives ₦70,000
Correct Answer
B
Correct Option:
Goodwill ₦140,000; A receives ₦84,000; B receives ₦56,000

About This Question

This is Gce Model Questions Vol1 2021 Financial Accounting Question 18. It is one of the objective questions from the 2021 Gce Model Questions Vol1 Financial Accounting examination.

Difficulty level: Hard .

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