Question 07 Chapter 3 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 07 Chapter 3 of +2- Part-

Question 07 Chapter 3 of +2-Part-1

7. (Profit & Loss on fixed asset are given) In a firm of partners X and Y, the following was the financial position:
2014: Profits Rs.30,000 (including profit on sale of land Rs.40,000)
2015: Loss Rs.25,000 (After crediting claim for loss of asset Rs.35,000)
2016: Profit Rs.50,000 (Before paying manager’s commission Rs.10,000)
2017: Profit Rs.40,000 (including loss on sale of plant Rs.10,000)
Goodwill is to be valued two times of average normal profit of last four years. Find out goodwill.

 

The solution of Question 07 Chapter 3 of +2 Part-1: – 

 

Average Profit = Total Profit for past given years
    Number of years
     
  = (-10,000) + (-60,000) + 40,000 + 50,000
  4
     
  = 20,000
  4
     
  = 5,000

 

Number of years’ purchase = 2
Goodwill = Average Profit X Number of years’ purchase
Goodwill = 5,000 X 2
Goodwill = 10,000

 

 

Working Note : –

*1 Calculation of Profits of last three years

Adjusted Profit for 1st year = Total Profit −Interest on capital
  = 30,000 – 40,000
 
  = (-10,000)

 

Adjusted Profit for 2nd year = Total Profit – Claim for loss of asset
  = -(25,000) – 35,000
 
  = (-60,000)

 

Adjusted Profit for 3rd year = Total Profit − Interest on capital
  = 50,000 – 10,000
 
  = 40,000

 

Adjusted Profit for 3rd year = Total Profit − Interest on capital
  = 40,000 + 10,000
 
  = 50,000





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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 07 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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