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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Average profit earned by a firm is ₹7,50,000, which includes overvaluation of stock of ₹30,000 on an average basis. The capital invested in the business is ₹42,00,000 and the normal rate of return is 15%. Calculate the goodwill of the firm on the basis of 3 times the super profit.
Average Actual Profit = ₹7,50,000 – ₹30,000 (overvaluation of stock deducted) = ₹7,20,000.
Normal Profit = ₹42,00,000 × 15% = ₹6,30,000.
Super Profit = ₹7,20,000 – ₹6,30,000 = ₹90,000.
Goodwill = ₹90,000 × 3 = ₹2,70,000.
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.23 - 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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