# Question 03 Chapter 3 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 03 Chapter 3 of +2-A

3. Calculate the value of goodwill on the basis of three years’ purchase of the average  profit of the preceding five years which were as follows:

 Year 2018-19 2017-18 2016-17 2015-16 2014-15 Profits 8,00,000 15,00,000 18,00,000 4,00,000 (Loss) 13,00,000

The solution of Question 03 Chapter 3 of +2-A

:

 Average Profit = Total Profit for past given years Number of years
 Average Profit = 13,00,000+(-4,00,000)+18,00,000+15,00,000+ 8,00,000 5

 = 50,00,000 5 = 10,00,000

Note: – In the year 2015-16 there is a loss, so this amount will be subtracted from the total profit

Number of years’ purchase = 3

 Goodwill = Average Profit X Number of years’ purchase Goodwill = 10,00,000 X 3 Goodwill = 30,00,000

Also, Check out the solved question of previous Chapters: –

### T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
• Chapter No. 3 – Goodwill: Nature and Valuation
• Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 – Admission of a Partner
• Chapter No. 6 – Retirement/Death of a Partner
• Chapter No. 7 – Dissolution of a Partnership Firm

### T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 – Financial Statements of a Company
• Chapter No. 2 – Financial Statement Analysis
• Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
• Chapter No. 4 – Accounting Ratios
• Chapter No. 5 – Cash Flow Statement