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Question 21 Chapter 3 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 21 Chapter 3 of +2 Part-1 - USHA Publication 12 Class Part - 1
Question 21 Chapter 3 of +2 Part-1 - USHA Publication 12 Class Part - 1

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Question 21 Chapter 3 of +2 Part-1 – USHA Publication 12 Class Part – 1

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The average net profit expected in future by Ram Lal & Co. are ₹ 60,000 per year. The average capital employed in the business by firm 5,00,000. The normal rate of return on the capital employed in similar business is 10%. Calculate goodwill of the firm by
(a) Super profit method on the basis of two years purchase, and
(b) Capitalisation method (Super Profit & Average Profit both)

The solution of Question 21 Chapter 3 of +2 Part-1 – USHA Publication 12 Class Part – 1: – 

Actual Profits p.a=Rs.60,000
Capital Employed=Rs. 50,000
Rate of return=10%

 

Normal Profit=Capital EmployedXNormal Rate of Return
 100
     
 =5,00,000X10
 100
     
 =50,000  

i) Super Normal Profit Method

Super Profit=Actual Profit – Normal Profit
 =60,000 – 50,000
 =10,000

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Number of years’ purchase=2
Goodwill=Super Profit X Number of years’ purchase
 =10,000 X 2
 =20,000

 

ii) Capitalisation Method:

a) Capitalisation of Super Profits Method:

Goodwill=Average ProfitX100
 Normal Rate of Return
     
 =60,000X100
 10
     
 =6,00,000  

 

Goodwill=Capitalised value of the business – Average Capital Employed
 =6,00,000 – 5,00,000
 =1,00,000

 

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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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