Question 10 Chapter 3 – Unimax Class 12 Part 1
10. A Firm earned net profit during the last five years as follows : 2017 Rs. 7000; 2018 Rs. 6500; 2019 Rs. 8000; 2020 Rs. 7500 and 2021 Rs. 6000. The capital investment of the firm is Rs. 40000. A fair return on Capital in the market is 12%. Find out the value of goodwill of the business, if it is based on three year’s purchase of average super profits of past five years.
The solution of Question 10 Chapter 3 – Unimax Class 12 Part 1:
Total Profits = Rs. 7000 + Rs. 6500 + Rs. 8000 + Rs. 7500 + Rs. 6000= Rs. 35000
Average Profits = Total Profits/Number of years
Normal Profits = Capital employed X Normal rate of return
= Rs. 40000 X 12/100
= Rs. 4800
Super Profits = Average Profits – Normal Profits
= Rs. 7000 – Rs. 4800
= Rs. 2200
Goodwill = Super Profits X Number of years of purchase of super profits
= Rs. 2200 X 3 years
= Rs. 6600
What is Partnership – Meaning and Its 4 Types
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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