When goodwill has to be inferred from the arrangement of capital and profit sharing ratio, it is called.

When goodwill is not explicitly mentioned but needs to be calculated from the capital contributions and profit sharing ratio arrangements, it is termed as Hidden Goodwill (also called Inferred Goodwill).

This situation typically arises when:

• A new partner is admitted
• The new partner brings in a specific amount of capital
• New profit sharing ratio is decided
• No direct mention of goodwill value is made

The goodwill is then inferred by comparing what the new partner's capital represents as per the new profit sharing ratio with the actual total capital of the firm.

For example: If a new partner brings ₹40,000 for 1/4th share, the total firm's value is inferred as ₹1,60,000 (40,000 × 4/1). If the combined capital of old partners plus new partner's capital is only ₹1,40,000, then hidden goodwill = ₹20,000.

The other options represent methods of valuing goodwill when it needs to be calculated:

• Average Profit Method: Values goodwill as average profits × number of years
• Super Profit Method: Values goodwill based on excess profits over normal profits
• Capitalisation Method: Values goodwill by capitalising average or super profits

These methods are used to determine the amount of goodwill, whereas hidden goodwill refers to goodwill that is inferred from arrangements rather than being explicitly stated or calculated through these methods.