Question 7 Chapter 3 of Class 12 Part – 1 VK Publication

Question 7 Chapter 3 of Class 12 Part - 1 VK Publication

Question 7 Chapter 3 of Class 12 Part – 1

7. A partnership firm earned net profits during the last three years ended on 31st March as follows 2016- Rs. 17,000; 2017 Rs. 20,000 and 2018 Rs. 23,000. The capital investment in the frim throughout the above mentioned period has been Rs. 80,000. Having regard to the risk involved, 15% is considered to be fair return on capital. Calculate the value of goodwill on the basis of 2 years’ purchase of super profit earned during the above mentioned three years.

The solution of Question 7 Chapter 3 of Class 12 Part – 1: –

 Average Profit = Total Profit Number of Years = 17,000 + 20,000 + 23,000 3 = 60,000 3 = 20,000

Normal Profit = 80,000 ×15/100= Rs. 12,000
Super Profit = Average Profit – Normal Profit
= 20,000 – 12,000 = Rs. 8,000
Goodwill = Super Profit x Number of Years’ Purchase
= 8,000 x 2 = Rs. 16,000

Comment if you have any questions.

Also, Check out the solved question of previous Chapters: –