Question

20,000
8. Premium brought by the new partner will be shared by the existing partners in:
a. Sacrificing Ratio
b. Old Ratio
c. New Ratio
d. Gain Ratio
9. Business showed that the capital employed on January 1, 2007 was Rs. 4,50,00
follows: 2007-Rs. 40,000; 2008 -Rs.50,000; 2009- Rs. 60,000; 2010 -Rs. 70,000
out the value of goodwill, based on three year's purchase of the super profit of the
10%.
a. Rs. 46000
b. Rs. 42000
d.40000
c. Rs. 45000​

Answer 1

8. Premium brought by the new partner will be shared by the existing partners in their (a) sacrificing ratio.

9. Correct question:

A business showed that the capital employed on January 1, 2007, was Rs. 4,50,000. Their profits for the last four years were as follows:

2007 - Rs 40,000

2008 - Rs 50,000

2009 - Rs 60,000

2010 - Rs 70,000

The normal rate of return is 10%.

Find out the value of goodwill, based on three years' purchase of the super profit of the firm.

a. Rs 36,000

b. Rs 32,000

d. Rs 30,000

c. Rs 35,000​

Given:

• The capital employed was Rs 4,50,000.
• The profit for the last 4 years were - 2007: Rs 40,000; 2008: Rs 50,000; 2009: Rs 60,000 and 2010: Rs 70,000.
• The normal rate of return [NRR] is 10%.

To find: The value of goodwill based on 3 years' purchase of the super profit for the firm.

Answer:

Average profit = Total profit ÷ Number of years

Total profit = Sum of all years' profits

Total profit = Rs 40,000 + Rs 50,000 + Rs 60,000 + Rs 70,000 = Rs 2,20,000

Number of years = 4

Average profit = Rs 2,20,000 ÷ 4

Average profit = Rs 55,000

Normal profit = Capital employed × NRR

Normal profit = Rs 4,50,000 × (10 ÷ 100)

Normal profit = Rs 45,000

Super profit = Average profit - Normal profit

Super profit = Rs 55,000 - Rs 45,000

Super profit = Rs 10,000

Goodwill = Number of years' purchase × Super profit

Goodwill = 3 × Rs 10,000

Goodwill = Rs 30,000

Therefore, the goodwill of the firm is (c) Rs 30,000.