Question

plz ans good will 12 th account​

Answer 1

Given data:

• Capital employed on 31st December, 1992 was Rs 1,00,000.
• Profits for five years, 1988, 1989, 1990, 1991 and 1992 were Rs 60,000, Rs 55,000, Rs 75,000, Rs 85,000 and Rs 65,000 respectively.
• Goodwill is valued at 2 years' purchase of the super profit of the business.
• The NRR is 10%.

To find: The goodwill.

Answer:

As per the question, we need to find the goodwill of the firm based on the super profit of the business. We'll first need to calculate the super profit.

Super profit - Average profit - Normal profit

Average profit = Sum of the profits of all the years/Number of years

Average profit = Rs 60,000 + Rs 55,000 + Rs 75,000 + Rs 85,000 + Rs 65,000/5

Average profit = Rs 68,000

Normal profit = (Capital employed × NRR [Normal Rate of Return])/100

Normal profit = (Rs 1,00,000 × 10)/100

Normal profit = Rs 10,000

Super profit = Rs 68,000 - Rs 10,000

Super profit = Rs 58,000

Now that we have the super profit, we can calculate the goodwill of the firm.

Goodwill = Super profit × Number of years' purchase

Goodwill = Rs 58,000 × 2

Goodwill = Rs 1,16,000

Therefore, the goodwill of the business is Rs 1,16,000.