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On R's retirement, the amount payable to him after all adjustments, work out to be Rs. 60,000 but the remaining partners P and Q agreed to pay him Rs. 75,000 in full settlement of his claim. Identify the term which represent Rs. 15,000 extra, that is paid to R.

Solution

✅ Correct Option: 2

When remaining partners pay a retiring partner an amount in excess of what is due after all adjustments, the excess amount represents his share of goodwill that has not been separately accounted for. This extra payment is known as Hidden Goodwill. Here Rs. 15,000 represents R's share of hidden goodwill.

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