# Question 35 Chapter 3 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 35 Chapter 3 of +2-A

35. Average profit earned by a firm is 7,50,000 which includes overvaluation of stock of 30,000 on an average basis. The capital invested in the business is 42,00,000 and the normal rate of return is 15%. Calculate goodwill of the firm on the basis of 3 time the super profit.

The solution of Question 35 Chapter 3 of +2-A

:

 Super Profit = Actual average Profit – Normal Profit Actual average Profit = Average Profit + or – Adjustments (if any) = 7,50,000 +30,000 (average Overvaluation of stock) = 7,20,000

 Normal Profit = Capital Employed X Normal Rate of Return 100
 = 42,00,000 X 15 100 = 6,30,000

 Super Profit = Actual Profit – Normal Profit = 7,20,000 – 6,30,000 = 90,000

Number of years’ purchase = 3

 Goodwill = Super Profit X  Number of years’ purchase = 90,000 X 3 = 1,80,000

### 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)

• 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