Question 1

Q.No.1 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionCalculate the value of Goodwill on the basis of three years' purchase of four years' average profit. Profits of the firm for the last four years ending on 31st March, were: 2021 – ₹ 12,000; 2022 – ₹ 18,000; 2023 – ₹ 16,000; 2024 – ₹ 14,000.SolutionWorking NotesItemWorkingAmount (₹)1. Average profit of 4 years(12,000 + 18,000 + 16,000 + 14,000) ÷ 4 = 60,000 ÷ 415,0002. Goodwill (3 years' purchase)15,000 × 345,000Answer: Goodwill of the firm = ₹45,000.

Question 2

Q.No.2 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionSuraj and Chetan are partners in a firm sharing profits and losses equally. They decide to take Deep into partnership from 1st April, 2024 for 1/5th share in the future profits. For this purpose, goodwill is to be valued at 100% of the average annual profits of the previous three or four years, whichever is higher.The annual profits for the purpose of goodwill for the past four years were:Year endedProfit (₹)31st March, 20242,88,00031st March, 20231,81,80031st March, 20221,87,20031st Mar

Question 3

Q.No.3 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionCalculate value of goodwill of a firm based on three years' purchase of average profit of the preceding five years which were as follows:Year endedProfit (₹)31st March, 20248,00,00031st March, 202315,00,00031st March, 202218,00,00031st March, 20214,00,000 (Loss)31st March, 202013,00,000SolutionWorking NotesItemWorkingAmount (₹)1. Average profit of 5 years(8,00,000 + 15,00,000 + 18,00,000 − 4,00,000 + 13,00,000) ÷ 5 = 50,00,000 ÷ 510,00,0002. Goodwill (3 years' purchase)10,00,000 × 330,00

Question 4

Q.No.4 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionCalculate Goodwill of the firm on the basis of two years' purchase of the average profit of last four years. Profits for last four years ended 31st March, were:Year (ended 31st March)Profit (₹)20233,06,00020244,84,00020254,66,00020263,44,000Additional Information:(a) Closing Stock for the year ended 31st March, 2025 was undervalued by ₹ 26,000.(b) Cost of management expenses of ₹ 20,000 per annum should be charged for the purpose of goodwill valuation.SolutionNote: Closing stock of 31st

Question 5

Q.No.5 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionDivya purchased Jyoti's business on 1st April, 2024. Profits shown by Jyoti's business for the last three financial years were:2021–22: ₹ 1,00,000 (including profit on sale of machine (abnormal gain) of ₹ 12,500).2022–23: ₹ 1,25,000 (after charging loss of stock by fire (abnormal loss) of ₹ 25,000).2023–24: ₹ 1,12,500 (excluding ₹ 12,500 as insurance premium on firm's property, now to be insured).Calculate value of firm's goodwill on the basis of two years' purchase of the average profit

Question 6

Q.No.6 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionGoodwill of the firm is valued at 3 years' purchase of average profit of last five years. Profits and losses for the years were:YearIIIIIIIVVVIProfit / (Loss) (₹)3,60,000(4,80,000)11,04,0006,60,0008,40,00010,80,000Additional Information:(a) Profit on sale of fixed asset during year II amounted to ₹ 24,000. Profit on sale of fixed asset during year IV was ₹ 60,000.(b) Loss on sale of fixed asset during year VI amounted to ₹ 60,000.Calculate value of Goodwill after adjusting the above.Solu

Question 7

Q.No.7 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionSumit purchased Amit's business on 1st April, 2024. Goodwill was decided to be valued at two years' purchase of average normal profit of last four years. The profits for the past four years were:Year ended31st March, 202131st March, 202231st March, 202331st March, 2024Profits (₹)80,0001,45,0001,60,0002,00,000Following information was taken from the books of account:(i) Stock theft (abnormal loss) of ₹ 20,000 was debited to Profit & Loss Account for the year ended 31st March, 2021.(ii) A

Question 8

Q.No.8 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionSonu and Sumit are partners sharing profits and losses in the ratio 3 : 2. They admit Sahil as a partner for 1/5th share. For this purpose, goodwill of the firm is to be valued on the basis of 3 years' purchase of last 4 years' average profit. Profits for the last four years ended on 31st March were as follows:YearProfits (₹)20217,00,000 [including an abnormal gain of ₹ 50,000]20222,50,000 [after charging an abnormal loss of ₹ 69,950]20236,10,00020244,50,000Following additional informati

Question 9

Q.No.9 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionProfits of a firm for the year ended 31st March for the last five years were:Year ended31st March, 202031st March, 202131st March, 202231st March, 202331st March, 2024Profits (₹)20,00024,00030,00025,00018,000Calculate value of goodwill on the basis of three years' purchase of Weighted Average Profit after assigning weights 1, 2, 3, 4 and 5 respectively to the profits for years ended 31st March, 2020, 2021, 2022, 2023 and 2024.SolutionYearProfit (₹)WeightProduct (₹)202020,000120,000202124

Question 10

Q.No.10 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionRaman and Daman are partners sharing profits in the ratio of 60 : 40 and for the last four years they have been getting annual salaries of ₹ 50,000 and ₹ 40,000 respectively. The annual accounts have shown the following net profits before charging partners' salaries:Year ended 31st March, 2022 – ₹ 1,40,000; 2023 – ₹ 1,01,000 and 2024 – ₹ 1,30,000.On 1st April, 2024, Zeenu is admitted to the partnership for 1/4th share in profit (without any salary). Goodwill is to be valued at four years

Question 11

Q.No.11 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionCalculate Goodwill of a firm on the basis of three years' purchase of the Weighted Average Profits of the last four years. The profits of the last four years were:Year (ending 31st March)Amount (₹)20232,80,00020242,70,00020254,69,00020265,38,100(a) On 1st April, 2023, a major plant upgrade was undertaken for ₹ 1,00,000 which was charged to revenue. The said sum is to be capitalised for goodwill calculation subject to adjustment of depreciation of 10% on reducing balance method.(b) For th

Question 12

Q.No.12 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionApoorva and Muskaan had a firm in which they had invested ₹ 50,000. On an average, the profits were ₹ 16,000. Normal rate of return in the industry is 15%. Goodwill is to be valued at four years' purchase of profits in excess of profits @ 15% on the money invested. Value the goodwill.SolutionWorking NotesItemWorkingAmount (₹)1. Normal profit50,000 × 15%7,5002. Super profit16,000 − 7,5008,5003. Goodwill (4 years' purchase of super profit)8,500 × 434,000Answer: Goodwill of the firm = ₹34,0

Question 13

Q.No.13 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionRakesh and Ashok earned a profit of ₹ 5,000. They employed capital of ₹ 25,000 in the firm. It is expected that the normal rate of return is 15% of the capital. Calculate amount of goodwill if goodwill is valued at three years' purchase of super profit.SolutionWorking NotesItemWorkingAmount (₹)1. Normal profit25,000 × 15%3,7502. Super profit5,000 − 3,7501,2503. Goodwill (3 years' purchase of super profit)1,250 × 33,750Answer: Goodwill of the firm = ₹3,750.

Question 14

Q.No.14 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionA partnership firm earned net profits during the last three years ended 31st March, as follows: 2022 – ₹ 17,000; 2023 – ₹ 20,000; 2024 – ₹ 23,000.Capital investment in the firm throughout the above-mentioned period was ₹ 80,000. Having regard to the risk involved, 15% is considered to be a fair return on the capital. Calculate value of goodwill on the basis of two years' purchase of average super profit earned during the above-mentioned three years.SolutionWorking NotesItemWorkingAmount

Question 15

Q.No.15 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionSaurabh Enterprises gave the following information to calculate value of Goodwill by Super Profit Method:Normal Rate of Return – 15%; Profit for the Year – ₹ 1,50,000; Number of Years' Purchase – 3 years; Partners' Capital – ₹ 5,00,000; General Reserve – ₹ 3,00,000; Sundry Creditors – ₹ 1,00,000.SolutionNote: Capital employed = Partners' Capital + Reserves (the net assets). Sundry Creditors are an outside liability and are not part of it.Working NotesItemWorkingAmount (₹)1. Capital emplo

Question 16

Q.No.16 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionLavit & Co. gave the following information to calculate value of Goodwill by Super Profit Method:Normal Rate of Return – 15%; Profit for the Year – ₹ 1,50,000; Number of Years' Purchase – 3 years; Partners' Capital – ₹ 5,00,000; Sundry Creditors – ₹ 1,00,000; Fixed Assets – ₹ 4,00,000; Stock (Inventory) – ₹ 2,00,000; Sundry Debtors – ₹ 1,00,000; Cash in Hand – ₹ 50,000; Cash at Bank – ₹ 1,50,000.SolutionNote: Capital employed = Total assets − outside liabilities (Sundry Creditors).Workin

Question 17

Q.No.17 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionAverage net profit expected in future by Zee & Co. is ₹ 3,60,000 per year. Capital employed in the business by the firm is ₹ 20,00,000. Normal rate of return on capital in this class of business is 10%. Remuneration of the partners (Management Cost) is estimated to be ₹ 60,000 p.a. Find the value of goodwill on the basis of two years' purchase of super profit.SolutionWorking NotesItemWorkingAmount (₹)1. Normal profit20,00,000 × 10%2,00,0002. Actual average profit after management cost3,6

Question 18

Q.No.18 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionCapital of the firm of Anu and Benu is ₹ 5,00,000 and the market rate of interest is 15%. Annual salary to partners is ₹ 30,000 each. Profits for the last 3 years were ₹ 1,50,000; ₹ 1,80,000 and ₹ 2,10,000. Calculate value of goodwill of the firm by Super Profit Method if it is valued at 3 years' purchase of Super Profit.SolutionNote: The profits are taken as stated before the partners' salaries, so the salaries (₹ 30,000 × 2 = ₹ 60,000 a year) are deducted from each year's profit.Workin

Question 19

Q.No.19 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionIdeal Marketing earned an average profit of ₹ 4,00,000 during the last five years. Normal rate of return on capital employed is 10%. Balance Sheet of the firm as at 31st March, 2024 was as follows:Liabilities₹Assets₹Capital A/cs: Shyam5,00,000Land and Building10,00,000Sunder5,00,000Furniture2,00,000Current A/cs: Shyam2,00,000Investments1,00,000Sunder2,00,000Sundry Debtors5,00,000Reserves3,40,000Bills Receivable50,000Sundry Creditors4,00,000Closing Stock3,00,000Bills Payable1,00,000Cash a

Question 20

Q.No.20 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit Singh · Accepted Answer

QuestionVaruna and Karuna are partners for equal shares. They admit Lata into partnership for 1/4th share. It was agreed to value goodwill of the firm at 4 years' purchase of super profit. Normal rate of return is 15% of the capital employed. Average profit of the firm is ₹ 4,00,000. Balance Sheet of the firm as at 31st March, 2024 was as follows:Liabilities₹Assets₹Capital A/cs: Varuna5,00,000Furniture4,00,000Karuna5,00,000Computers3,00,000Reserves and Surplus5,50,000Electrical Fittings1,00,000S

Item	Working	Amount (₹)
1. Average profit of 4 years	(12,000 + 18,000 + 16,000 + 14,000) ÷ 4 = 60,000 ÷ 4	15,000
2. Goodwill (3 years' purchase)	15,000 × 3	45,000

T.S. Grewal ISC Class 12 Accountancy Solutions Chapter 2 - Goodwill

Quick Chapter Summary & Cheat Sheet

💡 Double Entry Accounting Principles

Topics & Questions Solved:

Table of Contents

Q.No.1 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Question

Solution

Working Notes

Q.No.2 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.3 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.4 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.5 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.6 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.7 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.8 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.9 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.10 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.11 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.12 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.13 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.14 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.15 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.16 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.17 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.18 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.19 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.20 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.21 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.22 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.23 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.24 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.25 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.26 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.27 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.28 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.29 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.30 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.31 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.32 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.33 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Q.No.34 | Chapter 2 – Goodwill | T.S. Grewal ISC Class 12 Solution

Sarbjit SinghB.Com and M.Com