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

Question 22 Chapter 3 of +2-A
Question No.22- Chapter No.3 - T.S. Grewal +2 Book 2019-Solution

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Question 22 Chapter 3 of +2-A

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

 

Normal Profit=Capital EmployedXNormal Rate of Return
100
 =50,000X15
100
 =7,500  

 

Super Profit16,000- 7,500
 =8,500

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Number of years’ purchase = 4

Goodwill=Super ProfitX number of years of 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
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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