Answer:
The correct option is (B)
Explanation:
Given:
Existing partner's total capital is $180,000 (140,000 + 40,000)
New partner, Erin's contribution is $52,000
So new paid in capital is $232,000 (180,000 + 52,000)
Required capital = [tex]\frac{Investment\ by\ Erin}{interest}[/tex]
Interest in % is 20% [tex]\left (\left ( \frac{1}{5} \right )\times 100 \right )[/tex]
Required capital = [tex]\frac{52,000}{0.2}[/tex]
= $260,000
Goodwill = Required capital - paid in capital
= 260,000 - 232,000
=$28,000
So, amount of goodwill is $28,000.
