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Question 27 Chapter 3 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 27 Chapter 3 of +2-A
Question No.27- Chapter No.3 - T.S. Grewal +2 Book 2019-Solution

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Question 27 Chapter 3 of +2-A

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27. A partnership firm earned net profits during the past three years as follows:

Year Ended 31st March 201931st March 201831st March 2017
Profit/(Loss)20,00024,00030,000

Capital investment in the firm throughout the above-mentioned period has been 4,00,000. Having regard to the risk involved, 15% is considered to be a fair return on the capital. The
remuneration of the partners during this period is estimated to be 1,00,000 p.a.
Calculate the value of goodwill on the basis of two years’ purchase of average super profit earned during the above-mentioned three years.

The solution of Question 27 Chapter 3 of +2-A:

Year
Profit before
Partners’
Remuneration
A

Partners’
Remuneration
D

Actual Profit
after
Remuneration
(C = A – B)


20171,70,0001,00,00070,000
20182,00,0001,00,0001,00,000
20192,30,0001,00,0001,30,000
Total3,00,000

 

Super ProfitActual average Profit- Normal Profit
Actual average Profit=Total Profit for past given years
 =Number of years
 =3,00,000
3
 =1,00,000

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Normal Profit=Capital EmployedXNormal Rate of Return
100
 =4,00,000X15
100
 =60,000  

 

Super Profit1,00,000- 60,000
 =40,000

Number of years’ purchase = 2

Goodwill=Super Profit X number of years of purchase
Goodwill=40,000 X 2
Goodwill =80,000

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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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