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

 

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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 - 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

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