[Sister99]

( November, 1967 CPA Exam)
:The total of the partners' capital accounts was $110,000.00 before recognition of partnership goodwill in preparation for the withdrawal of a partner whose profit and loss sharing ratio is 20%.
He was paid $28,000.00 by the firm in final settlement for his interest.
The remaining partners' capital accounts excluding their share of the goodwill totaled $90,000.00 after his withdrawal.
The total goodwill of the firm agreed upon was?

A) $40,000
B) $28,000
C) $20,000
D) $8,000

:) Thanks

[ArcSine]

The total capital balances, without considering goodwill, declined from ___ to ___ as a result of the partner's departure. Thus, the departing partner must have had a capital balance of ___, without considering goodwill.

Yet he was given ____ to redeem his interest, implying that his share of the goodwill was ____.

Remembering that recognition of goodwill is tantamount to the recognition of a gain, and since the departing partner's share of income items is ____%, then the total goodwill must be ____.

And remember for future reference, first show your attempts at answering the problem, then you'll get some guidance. This time, I just wanted to show a little... ahem... goodwill.

[morgaine300]

Are you using this to practice for the CPA exam? If so, I'm going to expect more out of you. You should have already attempted to answer this as best as you possibly can and then you can get your work checked. You've posted this twice that I've seen but haven't provided any attempt on your part to do it.