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

Question 39 Chapter 3 of +2-A

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)

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 - Question 39 Chapter 3 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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