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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Question 40 Chapter 3 of +2-A
40. A business has earned average profit of 4,00,000 during the last few years and the normal rate of return in similar business is 10%. Find value of goodwill by
| Capital Employed | = | Total Assets - Creditors |
| = | 40,00,000 - 7,20,000 | |
| = | 32,80,000 |
| Normal Profit | = | Capital Employed | X | Normal Rate of Return |
| 100 |
| = | 32,80,000 | X | 10 |
| 100 | |||
| = | 3,28,000 |
| Super Profit | = | Actual Profit - Normal Profit |
| = | 4,00,000- 3,28,000 | |
| = | 72,000 |
(i) Capitalisation of Super Profit Method: -
| Capitalized Value of Average Profit | = | Profit X 100 |
| Normal Rate of Return |
| = | 72,000X 100 |
| 10 | |
| = | 7,20,000 |
(ii) Super Profit Method if the goodwill is valued at 3 years’ purchase of super profits
| Goodwill | = | Super Profit x Number of years of purchase |
| = | 72,000 x 3 | |
| = | 2,16,000 |
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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 "Q.No.40 | 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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