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Question 07 Chapter 3 of +2-Part-1
7. (Profit & Loss on fixed asset are given) In a firm of partners X and Y, the following was the financial position:
2014: Profits Rs.30,000 (including profit on sale of land Rs.40,000)
2015: Loss Rs.25,000 (After crediting claim for loss of asset Rs.35,000)
2016: Profit Rs.50,000 (Before paying manager’s commission Rs.10,000)
2017: Profit Rs.40,000 (including loss on sale of plant Rs.10,000)
Goodwill is to be valued two times of average normal profit of last four years. Find out goodwill.
| Average Profit | = | Total Profit for past given years |
| Number of years | ||
| = | (-10,000) + (-60,000) + 40,000 + 50,000 | |
| 4 | ||
| = | 20,000 | |
| 4 | ||
| = | 5,000 |
| Number of years’ purchase | = | 2 |
| Goodwill | = | Average Profit X Number of years’ purchase |
| Goodwill | = | 5,000 X 2 |
| Goodwill | = | 10,000 |
Working Note : -
*1 Calculation of Profits of last three years
| Adjusted Profit for 1st year | = | Total Profit −Interest on capital |
| = | 30,000 – 40,000 | |
| = | (-10,000) |
| Adjusted Profit for 2nd year | = | Total Profit – Claim for loss of asset |
| = | -(25,000) – 35,000 | |
| = | (-60,000) |
| Adjusted Profit for 3rd year | = | Total Profit − Interest on capital |
| = | 50,000 – 10,000 | |
| = | 40,000 |
| Adjusted Profit for 3rd year | = | Total Profit − Interest on capital |
| = | 40,000 + 10,000 | |
| = | 50,000 |
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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 "Question 07 Chapter 3 of +2 Part-1 - USHA Publication 12 Class Part - 1", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to USHA Publication +2 Part 1.
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