# Question 24 Chapter 3 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 24 Chapter 3 of +2-A

24. Rakesh and Ashok earned a profit of 5,000. They employed capital of 25,000 in the firm. It is expected that the normal rate of return is 15% of the capital. Calculate amount of goodwill if goodwill is valued at three years’ purchase of super profit.

The solution of Question 24 Chapter 3 of +2-A

:

 Super Profit = Actual average Profit- Normal Profit Actual average Profit = Average Profit + Adjustments (if any) = 5,000 + 0 = 5,000

 Normal Profit = Capital Employed X Normal Rate of Return 100
 = 25,000 X 15 100 = 3,750

 Super Profit = 5,000- 3,750 = 1,250

Number of years’ purchase = 4

 Goodwill = Super ProfitX number of years’ purchase Goodwill = 1,250 X 3 Goodwill = 3,750

### 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

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