# Question 45 Chapter 3 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 45 Chapter 3 of +2-A

45. Average profit of GS & Co. is 50,000 per year. Average capital employed in the
business is 3,00,000. If the normal rate of return on capital employed is 10%, calculate goodwill of the firm by:

1. Super Profit Method at three years’ purchase; and
2. Capitalisation of Super Profit Method.

The solution of Question 45 Chapter 3 of +2-A

:

 Normal Profit = Capital Employed X Normal Rate of Return 100
 = 3,00,000 X 10 100 = 30,000
 Super Profit = Actual Profit – Normal Profit = 50,000 – 30,000 = 20,000

(i) Super Profit Method at three years’ purchase

 Goodwill = Super Profit X Numbers of years of purchases = 20,000 X 3 = 60,000

 Goodwill = Super Profit X 100 Normal Rate of Return
 = 20,000 X 100 20 = 2,00,000

### 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

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