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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

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Question 14 Chapter 3 of +2-Part-1

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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

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Normal Profit=Capital EmployedXNormal Rate of Return
 100
     
 =4,90,000X10
 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

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
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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