Question 14 Chapter 3 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 14 Chapter 3 of +2- Part-
Q-14 - CH-3 - Usha +2 Book 2018 - Solution

Question 14 Chapter 3 of +2-Part-1

14. (Super Profit Method) Calculate goodwill at two years purchase of super-profits.

Free Accounting book Solution - Class 11 and Class 12
  1. Normal rate of return-10%.
  2. Assets: Machinery Rs.2,00,000; Building Rs.3,00,000; Stock Rs.70,000;
  3. Debtors Rs.25,000; Provision for doubtful debts Rs.5,000; Preliminary expenses Rs.10,000.
  4. Liabilities : Creditors Rs.20,000; Bank Loan Rs.40,000.
  5. 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

 

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

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 14 Chapter 3 of +2 Part-1 - USHA Publication  12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms
error: Content is protected !!