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

Question 14 Chapter 3 of +2- Part-

Question 14 Chapter 3 of +2-Part-1

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

  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

 

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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
  • 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 14 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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