Question 22 Chapter 3 of USHA Publication 12 Class Part – 1

Question 22 Chapter 3 of +2 Part-1 - USHA Publication 12 Class Part - 1
Question 22 Chapter 3 of +2 Part-1 - USHA Publication 12 Class Part - 1

Question 22 Chapter 3 of USHA Publication 12 Class Part – 1

22. (Super Profit Method) A partnership firm earned net profit during the last three years as follows :

Year  N/P
2008 1,90,000
2009 2,20,000
2010 2,50,000

Calculate the value of goodwill is 2 years purchase of average weighted profits. The weights are 1,2,3,4 and 5 in the year of 2015, 2016, 2017, 2018 and 2019.

The solution of Question 22 Chapter 3 of USHA Publication 12 Class Part – 1: – 

Year  N/P
2008 1,90,000
2009 2,20,000
2010 2,50,000
     
Average Adjusted profit = Total adjusted profit
    No. of year purchases
  = 1,20,000

 

Normal Profit = Capital Employed X Normal Rate of Return
  100
         
  = 4,00,000 X 15
  100
         
  = 60,000    

 

Calculation of Super Profit = Average Adjusted Profit – Normal Profit
  = 1,20,000  – 60,000
  = 60,000
Calculation of Super Profit = Average Adjusted Profit – Normal Profit 
Goodwill = 1,20,000 – 60,000
Goodwill = 60,000
Capitalised value of the Goodwill = Super Profits x Number of years’ purchase
  = 60,000 x 2
  = 1,20,000
ii) Capitalisation of Business :        
Goodwill = Average Profit X 100
  Normal Rate of Return
         
  = 1,20,000 X 100
  15
         
  = 8,00,000    
Goodwill = Capitalised value of the business – Average Capital  
  = 8,00,000 – 4,00,000
  = 4,00,000

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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

 

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

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