Question 11 Chapter 3 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 11 Chapter 3 of +2- Part-

Question 11 Chapter 3 of +2-Part-1

11. (Super Profit Method) A firm earned net profit during the last five years as follows:
(i) Rs.7,000; (ii) Rs.6,500; (iii) Rs.8,000; (iv) Rs.7,500; (v) Rs.6,000. The capital investment of the firm is Rs.40,000. 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 years purchase of average super-profits of the past five years.

 

The solution of Question 11 Chapter 3 of +2 Part-1: – 

 

Super Profit = Actual average Profit – Normal Profit
Average Profit = Total Profit for past given years
    Number of years
     
  = 7,000 + 6,500 + 8,000 + 7,500 + 6,000
  5
     
  = 35,000
  5
     
  = 7,000

 

Average Profit = Capital Employed X Normal Rate of Return
  100
         
  = 40,000 X 12
  100
         
  = 4,800    

 

Super Profit = 7,000 – 4,800
  = 2,200
Number of years’ purchase = 3
Goodwill = Super Profit X Number of years’ purchase
Goodwill = 2,200 X 3
Goodwill = 6,600

 

Thanks, Please Like and share with your friends  

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
  • Chapter No. 3 – Partnership Accounts – II (Introduction)
  • Chapter No. 4 – Partnership Accounts – III (Goodwill: Nature and Valuation)
  • Chapter No. 5 – Partnership Accounts – IV (Reconstitution of Partnership)
  • Chapter No. 6 – Partnership Accounts – V (Admission of A Partner)
  • Chapter No. 7 – Partnership Accounts – VI (Retirement and Death of A Partner)
  • 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 (Balance Sheet Only)
  • Chapter No. 2 – Techniques of Financial Statement Analysis
  • Chapter No. 3 – Ratio Analysis 
  • Chapter No. 4 – Cash Flow Statement

 

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

2 Book 1 min - Question 11 Chapter 3 of +2 Part-1 - USHA Publication  12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.