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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
A partnership firm earned net profits during the last three years ended 31st March as follows: 2023 ₹17,000; 2024 ₹20,000; 2025 ₹23,000. The capital investment in the firm throughout the above-mentioned period has been ₹80,000. Having regard to the risk involved, 15% is considered to be a fair return on the capital. Calculate the value of goodwill on the basis of two years’ purchase of the average super profit earned during the above-mentioned three years.
Average Profit = (₹17,000 + ₹20,000 + ₹23,000) / 3 = ₹60,000 / 3 = ₹20,000.
Normal Profit = ₹80,000 × 15% = ₹12,000.
Super Profit = ₹20,000 – ₹12,000 = ₹8,000.
Goodwill = ₹8,000 × 2 = ₹16,000.
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.15 - 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.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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