Question 14 Chapter 3 of +2-Part-1
Table of Contents
14. (Super Profit Method) Calculate goodwill at two years purchase of super-profits.
- Normal rate of return-10%.
- Assets: Machinery Rs.2,00,000; Building Rs.3,00,000; Stock Rs.70,000;
- Debtors Rs.25,000; Provision for doubtful debts Rs.5,000; Preliminary expenses Rs.10,000.
- Liabilities : Creditors Rs.20,000; Bank Loan Rs.40,000.
- Profits : 1st Year Rs.80,000; 2nd Year Rs.1,05,000; 3rd Year Rs.90,000
Charge depreciation at 10% p.a. building in 3rd year.
The solution of Question 14 Chapter 3 of +2 Part-1: –
| Capital Employed | = | Total Assets – Liabilities |
| = | (2,00,000+2,70,000+70,000+25,000)-(5,000+10,000+20,000+40,000) | |
| = | 4,90,000 |
| Normal Profit | = | Capital Employed | X | Normal Rate of Return |
| 100 | ||||
| = | 4,90,000 | X | 10 | |
| 100 | ||||
| = | 49,000 |
| Average Profit | = | Total Profit for past given years |
| Number of years | ||
| = | 80,000 1,05,000 +(90,000 – 30,000) | |
| 3 | ||
| = | 2,45,000 | |
| 3 | ||
| = | 81,667 |
| Super Profit | = | 81,667 -49,000 |
| = | 32,667 | |
| Number of years’ purchase | = | 2 |
| Goodwill | = | Super Profit X Number of years’ purchase |
| = | 32,667 X 2 | |
| = | 65,334 |
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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 (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- 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
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement
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