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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
A and B were partners in a firm sharing profits equally. Their capitals were: A ₹1,20,000 and B ₹80,000. The annual rate of interest is 20%. Profits of the firm for the last three years were ₹34,000; ₹38,000 and ₹30,000. They admitted C as a new partner. On C’s admission the goodwill of the firm was valued at 2 years’ purchase of the super profits. Calculate the value of goodwill of the firm on C’s admission. (CBSE 2023)
Average Profit = (₹34,000 + ₹38,000 + ₹30,000) / 3 = ₹1,02,000 / 3 = ₹34,000.
Normal Profit = 20% of Capital Employed = 20% × ₹2,00,000 = ₹40,000.
Since the Average Profit (₹34,000) is less than the Normal Profit (₹40,000), the super profit is negative. Therefore, the firm has no goodwill.
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This guide covers "T.S. Grewal Class 12 Chapter 2 Q.13 - 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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