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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
The capital of the firm of Anuj and Benu is ₹10,00,000 and the market rate of interest is 15%. Annual salary to the partners is ₹60,000 each. The profits for the last three years were ₹3,00,000, ₹3,60,000 and ₹4,20,000. Goodwill of the firm is to be valued on the basis of two years’ purchase of the last three years’ average super profit. Calculate the goodwill of the firm. (CBSE 2019)
Average Profit = (₹3,00,000 + ₹3,60,000 + ₹4,20,000) / 3 = ₹10,80,000 / 3 = ₹3,60,000.
Less: Partners’ salary = ₹60,000 × 2 = ₹1,20,000.
Less: Normal Profit = ₹10,00,000 × 15% = ₹1,50,000.
Super Profit = ₹3,60,000 – ₹1,20,000 – ₹1,50,000 = ₹90,000.
Goodwill = Super Profit × Number of years’ purchase = ₹90,000 × 2 = ₹1,80,000.
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 "T.S. Grewal Class 12 Chapter 2 Q.10 - Nature and Valuation of Goodwill", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 2 - Nature and Valuation of Goodwill.
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