Question 03 Chapter 3 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 03 Chapter 3 of +2- Part-

Question 03 Chapter 3 of +2-Part-1

3. (Average Profit Method) Calculate goodwill at two years of purchase of average profits of last three years.

Year  Profit
1 1,500
2 Three times of 1st year profit
3 1½ times profits of second year

 

 

The solution of Question 03 Chapter 3 of +2 Part-1: – 

 

Average Profit = Total Profit for past given years
    Number of years
     
  = 1,500 + 4,500 + 6,750
  3
     
  = 12,750
  3
     
  = 4,250

 

Number of years’ purchase = 2
Goodwill = Average Profit X Number of years’ purchase
Goodwill = 4,250 X 2
Goodwill = 8,500

 

 

Working Note : –

*1 Calculation of Profits of last three years

1st year’s Profit = 1,500    
2nd year’s Profit = Three times of 1st year profit    
  = 1,500 X 3
 
  = 4,500/-    

 

1st year’s Profit = 1,500    
2nd year’s Profit = 1½ times profits of second year    
  = 4,500 X 1.5
 
  = 6,750/-    



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

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

 

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2 Book 1 min - Question 03 Chapter 3 of +2 Part-1 - USHA Publication  12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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