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Question 07 Chapter 3 of +2-Part-1
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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 |
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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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Comment if you have any questions.
Also, Check out the solved question of previous Chapters: –
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
