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

Question 10 Chapter 3 of +2- Part-
Q-10 - CH-3 - Usha +2 Book 2018 - Solution

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Question 10 Chapter 3 of +2-Part-1

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

Year Profit/Loss
I17,000
II20,000
III23,000

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

 

Normal Profit=Capital EmployedXNormal Rate of Return
 100
     
 =80,000X15
 10
     
 =12,000  

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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

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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