# Question 39 Chapter 3 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 39 Chapter 3 of +2-A

39. Form the following particulars, calculate the value of goodwill of a firm by applying Capitalisation of Average Profit Method:

1. Profits of last five consecutive years ending 31st March are: 2019 − 54,000; 2018 − 42,000; 2017 − 39,000; 2016 − 67,000 and 2015 − 59,000.
2. Capitalisation rate 20%.
3. Net assets of the firm 2,00,000.

The solution of Question 39 Chapter 3 of +2-A

:

 Average Profit = Total Product of Profit for past given years Number of years
 = 54,000+42,000+ 39,000+67,000+59,000 6 = 2,61,000 5 = 52,200
 Capitalized Value of Average Profit = Profit X 100 Normal Rate of Return
 = 52,200 X 100 20 = 2,61,000

 Goodwill = Capitalized value of Profit – Actual Capital = 2,61,000  – 2,00,000 = 61,000

### 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