L and M are partners sharing profits in the ratio 3:2. N is admitted as a partner for 1/5th of the share which is acquired from L. Goodwill of the firm is valued at Rs. 40,000 on N's admission. N will have to pay for Goodwill:

Initial Profit Sharing Ratio:

• L's share = $\frac{3}{5}$
• M's share = $\frac{2}{5}$

N's Admission:

N is admitted for $\frac{1}{5}$th share, which is acquired from L only (not from both partners).

This means L sacrifices $\frac{1}{5}$th share to N, while M makes no sacrifice.

Calculation of Goodwill Payment:

Total Goodwill of the firm = Rs. 40,000

N's share in goodwill = $\frac{1}{5} \times 40,000$ = Rs. 8,000

Since N's entire share comes from L's sacrifice, N must compensate L for giving up part of his share in the firm's profits.

Important: Goodwill is paid only to the sacrificing partner(s). Here, only L is sacrificing, so N pays Rs. 8,000 to L alone.

M receives nothing because M has not given up any share of his profit.

Answer: Option 2 - Rs. 8,000 to L