# Question 22 Chapter 3 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 22 Chapter 3 of +2-A

22. Gupta and Bose had a firm in which they had invested 50,000. On an average, the profits were 16,000. The normal rate of return in the industry is 15%. Goodwill is to be valued at four years’ purchase of profits in excess of profits @ 15% on the money invested. Calculate the value goodwill.

The solution of Question 22 Chapter 3 of +2-A

:

 Super Profit = Actual average Profit- Normal Profit Actual average Profit = Average Profit + Adjustments (if any) = 16,000 + 0 = 16,000

 Normal Profit = Capital Employed X Normal Rate of Return 100
 = 50,000 X 15 100 = 7,500

 Super Profit = 16,000- 7,500 = 8,500

Number of years’ purchase = 4

 Goodwill = Super ProfitX number of years’ purchase Goodwill = 8,500 X 3 Goodwill = 34,000

### T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
• Chapter No. 3 – Goodwill: Nature and Valuation
• Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 – Admission of a Partner
• Chapter No. 6 – Retirement/Death of a Partner
• Chapter No. 7 – Dissolution of a Partnership Firm

### T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 – Financial Statements of a Company
• Chapter No. 2 – Financial Statement Analysis
• Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
• Chapter No. 4 – Accounting Ratios
• Chapter No. 5 – Cash Flow Statement