Question 10 Chapter 3 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 10 Chapter 3 of +2- Part-

Question 10 Chapter 3 of +2-Part-1

10. (Super Profit Method) A partnership firm earned net profits during the last three years as follows:

Year  Profit/Loss
I 5,000
II 5,200
III 9,300

The capital investment in the firm throughout the above mentioned period has been Rs.80,000. Having regard to the risk involved, 15% is considered to be a fair return on the capital.
Calculate the value of goodwill on the basis of 2 years purchase of average super profits earned during the above mentioned three years.

 

The solution of Question 10 Chapter 3 of +2 Part-1: – 

 

Super Profit = Actual average Profit – Normal Profit
Average Profit = Total Profit for past given years
    Number of years
     
  = 17,000 + 20,000 + 23,000
  3
     
  = 60,000
  3
     
  = 20,000

 

Average Profit = Capital Employed X Normal Rate of Return
  100
         
  = 80,000 X 15
  10
         
  = 12,000    

 

Super Profit = 20,000 – 12,000
  = 8,0000
Number of years’ purchase = 2
Goodwill = Super Profit X Number of years’ purchase
Goodwill = 8,000 X 2
Goodwill = 16,000

 

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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 10 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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