Gce Model Questions Vol1 2025 Financial Accounting Question 18

Practice objective / multiple choice question 18 from the 2025 Gce Model Questions Vol1 Financial Accounting examination.

Gce Model Questions Vol1 2025 Financial Accounting Objective / Multiple Choice Hard Difficulty
Question 18 GCE_MODEL_QUESTIONS_VOL1 • 2025 • FINANCIAL_ACCOUNTING • objective

Three partners A, B and C share profits in the ratio 3 : 2 : 1. Their capital balances at the beginning of the year are £60,000, £40,000 and £20,000 respectively. The firm revalues its assets: the building is increased by £15,000 and equipment is decreased by £5,000. Goodwill is valued at £24,000 and is to be shared among the existing partners in their old profit‑sharing ratio. A new partner D is admitted, contributing £30,000 in cash for a 20 % share of future profits. After admission the profit‑sharing ratios become A : B : C : D = 2.5 : 2 : 1.5 : 2. Calculate (i) the amount of goodwill credited to each existing partner, (ii) the revaluation surplus credited to each existing partner, and (iii) the new capital balances of all four partners.

Answer Options

Correct Answer A. Goodwill - A: £12,000, B: £8,000, C: £4,000; Revaluation - A: £5,000, B: £3,333.33, C: £1,666.67; New capitals - A: £77,000, B: £51,333.33, C: £25,666.67, D: £30,000
B. Goodwill - A: £10,000, B: £8,000, C: £6,000; Revaluation - A: £5,000, B: £3,333.33, C: £1,666.67; New capitals - A: £75,000, B: £51,333.33, C: £27,666.67, D: £30,000
C. Goodwill - A: £12,000, B: £9,000, C: £3,000; Revaluation - A: £4,500, B: £3,000, C: £1,500; New capitals - A: £76,500, B: £52,500, C: £25,500, D: £30,000
D. Goodwill - A: £12,000, B: £8,000, C: £4,000; Revaluation - A: £6,000, B: £3,000, C: £2,000; New capitals - A: £78,000, B: £51,000, C: £26,000, D: £30,000
Correct Answer
A
Correct Option:
Goodwill - A: £12,000, B: £8,000, C: £4,000; Revaluation - A: £5,000, B: £3,333.33, C: £1,666.67; New capitals - A: £77,000, B: £51,333.33, C: £25,666.67, D: £30,000

About This Question

This is Gce Model Questions Vol1 2025 Financial Accounting Question 18. It is one of the objective questions from the 2025 Gce Model Questions Vol1 Financial Accounting examination.

Difficulty level: Hard .

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