Question 10 Chapter 3 – Unimax Class 12 Part 1 – 2021

Question 10 Chapter 3 - Unimax Class 12 Part 1 - 2021

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 Types

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

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

Leave a Reply

Your email address will not be published. Required fields are marked *