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Question 04 Chapter 3 of +2-A
4. Calculate the value of a firm's goodwill on the basis of one and a half years’
purchase of the average profit of the last three years. The profit for the first year was 1,00,000, profit for the second
year was twice the profit of the first year and for the third year, profit was one and half times of the profit of the second year.
| Average Profit | = | Total Profit for past given years*1 |
| Number of years |
| Average Profit | = | 1,00,000+2,00,000+3,00,000 |
| 3 |
| = | 6,00,000 |
| 3 | |
| = | 2,00,000 |
Number of years’ purchase = 1.5
| Goodwill | = | Average Profit X Number of years’ purchase |
| Goodwill | = | 2,00,000 X 1.5 |
| Goodwill | = | 3,00,000 |
Working Note: -
*1 Calculation of Profits of last three years
| 1st year’s Profit | = | 1,00,000 (Given) |
| 2nd year’s Profit | = | Twice the profit of the first year |
| = | 1,00,000 X 2 | |
| = | 2,00,000 | |
| 2nd year’s Profit | = | one and half times the profit of the second year |
| = | 2,00,000 X 1.5 | |
| = | 3,00,000 |
Also, Check out the solved question of previous Chapters: -
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "Q.No.4 | Chapter 3 – Goodwill: Nature and Valuation | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1.
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