Question 06 Chapter 3 of +2-A - T.S. Grewal 12 Class Part

Question 06 Chapter 3 of +2-A

Table of Contents

The solution of Question 06 Chapter 3 of +2-A:

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

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

6. Annu, Baby and Chetan are partners in firm sharing profits and losses equally. They decide to take Deep into partnership from 1st April 2019 for 1/5th share in the future profits. For this purpose, goodwill is to be valued at 100% of the average annual profits of the previous three or four years, whichever is higher. The annual profits for the purpose of goodwill for the
past four years were:
Year Ended Profit
31st March, 2019 2,88,000;
31st March, 2018 1,81,800;
31st March, 2017 1,87,200;
31st March, 2016 2,53,200.
Calculate the value of goodwill.

The solution of Question 06 Chapter 3 of +2-A:

Average Profit For 3 years	=	Total Profit for past given years
		Number of years

Average Profit	=	2,88,000+1,81,800+1,87,200
		3

	=	6,57,000
	=	3
	=	2,19,000

Average Profit For 4 years	=	2,88,000+1,81,800+1,87,200+2,53,200
		4

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	=	9,10,200
	=	4
	=	2,27,550

Goodwill is to be valued at 100% of the average annual profits of the previous three or four years, whichever is higher

Goodwill

2,27,550

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. 8 – Company Accounts – Accounting for Share Capital
Chapter No. 9 – Company Accounts – Issue of Debentures
Chapter No. 10 – Redemption of Debentures

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

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