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mediumMCQCUET Accountancy 2023 11 June Shift 32026Accountancy
1 mark

Hidden Goodwill is:

  1. A
    not disclosed to partners
  2. B
    Inferred from the arrangement of capital and profit sharing ratio
  3. C
    Brought into the book of accounts as an unrecorded Assets
  4. D
    not considered while calculating the capital contribution of new partner

Solution & Step-by-step Explanation

Hidden goodwill (or inferred goodwill) is the value of goodwill that is not explicitly stated in the partnership agreement at the time of admission of a new partner. Instead, it is calculated/inferred on the basis of the total capital of the firm derived from the new partner's capital contribution and their profit-sharing ratio relative to the total combined capital of all partners.

Practice this question

Try it yourself before checking the explanation above.

Hidden Goodwill is:
A
not disclosed to partners
B
Inferred from the arrangement of capital and profit sharing ratio
C
Brought into the book of accounts as an unrecorded Assets
D
not considered while calculating the capital contribution of new partner

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