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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
On 1st April, 2018, a firm had assets of ₹1,00,000 excluding stock of ₹20,000. The current liabilities were ₹10,000 and the balance constituted the Partners’ Capital Accounts. If the normal rate of return is 8% and the goodwill of the firm is valued at ₹60,000 at four years’ purchase of super profit, find the actual profits of the firm. (CBSE Sample Paper 2018)
Total Assets = ₹1,00,000 + ₹20,000 (stock) = ₹1,20,000.
Capital Employed = Total Assets – Current Liabilities = ₹1,20,000 – ₹10,000 = ₹1,10,000.
Normal Profit = ₹1,10,000 × 8% = ₹8,800.
Super Profit = Goodwill / Number of years’ purchase = ₹60,000 / 4 = ₹15,000.
Average Actual Profit = Normal Profit + Super Profit = ₹8,800 + ₹15,000 = ₹23,800.
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.32 - 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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