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

Question 22 Chapter 3 of +2-A

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)

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

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 22 Chapter 3 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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