Binod Ltd. earns profit of Rs. 50,000, Rs. 40,000, Rs.80,000, Rs. 70,000, Rs. 50,000 and Rs. 60,000 in 6 years with a capital of Rs. 2,00,000. The Normal rate of return on capital is 10%. Firm also spent Rs. 15,000 every year in Rent and Salaries. Using super profit method, calculate the value of the goodwill of the firm.
Answers
Grewal Vol. I (2018) Solutions for Class 12 Commerce Accountancy Chapter 2 Goodwill: Nature And Valuation are provided here with simple step-by-step explanations. These solutions for Goodwill: Nature And Valuation are extremely popular among Class 12 Commerce students for Accountancy Goodwill: Nature And Valuation Solutions come handy for quickly completing your homework and preparing for exams. All questions and answers from the Ts Grewal Vol. I (2018) Book of Class 12 Commerce Accountancy Chapter 2 are provided here for you for free. You will also love the ad-free experience on Meritnation’s Ts Grewal Vol. I (2018) Solutions. All Ts Grewal Vol. I (2018) Solutions for class Class 12 Commerce Accountancy are prepared by experts and are 100% accurate.
Page No 2.20:
Question 1:
Goodwill is to be valued at three years' purchase of four years' average profit. Profits for last four years ending on 31st March of the firm were:
2016 − ₹ 12,000; 2017 − ₹ 18,000; 2018 − ₹ 16,000; 2019 − ₹ 14,000.
Calculate amount of Goodwill.
ANSWER:
Number of years’ purchase = 3
Page No 2.20:
Question 2:
The profit for the five years ending on 31st March, are as follows:
Year 2014–₹ 4,00,000 Year 2015–₹ 3,98,000; Year 2016–₹ 4,50,000; Year 2017–₹ 4,45,000; Year 2018–₹ 5,00,000.
Calculate goodwill of the firm on the basis of 4 years' purchase of 5 years' average profit.
ANSWER:
Goodwill=Average Profits×Number of Years' Purchase Average Profits =
Total Profits
Number of Years
=
4,00,000+3,98,000+4,50,000+4,45,000+5,00,000
5
=
21,93,000
5
=Rs 4,38,600 Goodwill =4,38,600×4=Rs 17,54,400
Page No 2.20:
Question 3:
Calculate value of goodwill on the basis of three years' purchase of average profit of the preceding five years which were as follows:
Year 2017–18 2016–17 2015–16 2014–15 2013–14
Profits (₹) 8,00,000 15,00,000 18,00,000 4,00,000 (Loss) 13,00,000
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