Question 1

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

Sarbjit Singh · Accepted Answer

Question 1 Chapter 3 of Class 12 Part - 1
1. Calculate the amount of goodwill at three years' purchase of the last four years average profits. The profits and losses tor the last four years were: 1st year Rs. 5,000; 2nd year Rs. 8,000 3rd year (Loss) Rs. 3,000 and 4th year Rs. 6,000.
The solution of Question 1 Chapter 3 of Class 12 Part - 1: -

Average Profit
=
Total Profits

Number of years

=
5,000+8,000-3,000+6,000

4

Question 2

Question 2 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 2 Chapter 3 of Class 12 Part - 1
2. Karnail purchased Jarnaiľs business on 1st April, 2017. The profits for the last 3 years are:31st March, 2015- Rs. 40,000 (including an abnormal profit of Rs. 5,000)31st March, 2016- Rs. 50,000 (after charging an abnormal loss of Rs. 10,00031st March, 2017- Rs. 45,000 (excluding Rs. 5,000 as insurance premium of this year.)Calculate the value of goodwill on the basis of two years' of purchase of the average profit of the last three years.
The solutio

Question 3

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

Sarbjit Singh · Accepted Answer

Question 3 Chapter 3 of Class 12 Part - 1
3. Calculate the amount of goodwill at two years purchase of the average profits of the last three years. The profits earned by the firm in the 1st and 2nd year were Rs. 1,05,275 and Rs. 30,000 respectively but there is a loss in the 3rd year of Rs. 5,000 due to labour strikes.
The solution of Question 3 Chapter 3 of Class 12 Part - 1: -

Average Profit
=
Total Profit for past given years

Number of years

=
1,05

Question 4

Question 4 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 4 Chapter 3 of Class 12 Part - 1
4. Kaku purchased Polu's business on 1st April, 2018. The profits for the last five years are:31st March, 2014- Rs. 37,00031st March, 2015- Rs. 47,000 (after charging an abnormal loss of theft of Rs. 4,000)31st March, 2016- Rs. 53,000 (including an abnormal gain of Rs. 5,000)31st March, 2017- Rs. 60,000 (including a profit of lottery Rs. 6,000)31st March, 2018- Rs. 70,000 (after charging Rs. 10,000 a loss of furniture destroyed by fire)Calculate the val

Question 5

Question 5 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 5 Chapter 3 of Class 12 Part - 1
5. A partnership firm's profits for the last five years' were Rs. 37,000; Rs. 48,000; Rs. 22,000 Rs. 65,000; and Rs. 30,00. Calculate goodwill on the basis of four years' purchase of weighted average profit using the weights 1,2,3,4 and 5 respectively.
The solution of Question 5 Chapter 3 of Class 12 Part - 1: -

Year

Profit

Weight

Product

I
37,000
1
37,000

II
48,000
2
96,000

III
22,000
3
66,000

IV
65,000
4
2,60,000

V
30,000
5
1,5

Question 6

Question 6 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 6 Chapter 3 of Class 12 Part - 1
6. It was agreed to calculate the value of goodwill of a partnership firm at two years' purchase of the weighted average profits of the past four years. The appropriate weights to be used to each year ended on 31st March are: 2015-1; 2016-2; 2017-3, 2018-4.The profits for these years ended on 31st March are: 2015 Rs. 60,400; 2016 Rs. 69,600. 2017 Rs. 60,000; and 2018 Rs. 61,600.On a scrutiny of the accounts the following revaluations are made:(i) On 1st

Question 7

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

Sarbjit Singh · Accepted Answer

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 ye

Question 8

Question 8 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 8 Chapter 3 of Class 12 Part - 1
8. Calculate goodwill at three years purchase of the super profit. The firm was established with a Capital of Rs. 2,00,000. The normal rate of earning in such type of business is 15%. The firm earned Rs. 37,000 as profit during the year.
The solution of Question 8 Chapter 3 of Class 12 Part - 1: -
Normal Profit = Capital Employed x Normal Rate of Return = 2,00,000 ×15/100 = Rs. 30,000Super Profit = Average Profit - Normal Profit= 37,000 - 30,000 = Rs. 7

Question 9

Question 9 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 9 Chapter 3 of Class 12 Part - 1
9. A firm earned net profits during the last five years ended on 31st March as follows: 2014Rs. 94,000: 2015 Rs. 32,000; 2016 Rs. 22,000;2017 Rs. 38,000 and 2018 Rs. 44,000.The capital invested in the firm is 2,00,000. The fair return on capital in such type of business is 10%. Find out the value oft goodwill, based on the four years' purchase of super profit of the last five years.
The solution of Question 9 Chapter 3 of Class 12 Part - 1: -

Question 10

Question 10 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 10 Chapter 3 of Class 12 Part - 1
10. The capital employed in a firm is Rs. 5,00,000. Average rate of return on capital is 15%. The expected net profit of the firm is Rs. 1,50,000 for the year. The remuneration of the partners is estimated to be Rs. 25,000 p.a. Calculate the value of goodwill on the basis of two years' purchase of super profit.
The solution of Question 10 Chapter 3 of Class 12 Part - 1: -
Normal Profit = Capital Employed x Normal Rate of Return= 5,00,000 ×15/100 = Rs.

Question 11

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

Sarbjit Singh · Accepted Answer

Question 12 Chapter 3 of Class 12 Part - 1
12. A business has earned an average profit of Rs. 50,000 and the normal rate of return is 10%. Find out the goodwill by capitalisation of average profit method assuming that the business Owns total assets of Rs. 5,00,000 and external liabilities worth Rs. 1,00,000.
The solution of Question 12 Chapter 3 of Class 12 Part - 1: -
12. Capital Employed or Net Asset of the firm= Total Assets – External Liability
= 5,00,000-1,00,000 = Rs. 4,00,000

C

Question 12

Question 13 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 13 Chapter 3 of Class 12 Part - 1
13. Average profit of the firm is Rs. 3,00,000. Total assets of the firm are Rs. 28,00,000 and outside liabilities are Rs. 8,00,000. In the same type of business, the normal rate of return is 10% of the capital employed. Calculate value of goodwill by Capitalisation of Super Profit Method.
The solution of Question 13 Chapter 3 of Class 12 Part - 1: -
13. Capital Employed = Total Assets - External Liability
= 28,00,000-8,00,000 = Rs. 20,00,000

Normal

Question 13

Question 14 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 14 Chapter 3 of Class 12 Part - 1
14. A firm earns a profit of Rs. 15,000 per year. In the same type of business a 10% return is generally expected. The total assets of the firm are Rs. 1,70,000 and the external liabilities are 60,000. Calculate the value of goodwill on the basis of capitalisation of super profit method.
The solution of Question 14 Chapter 3 of Class 12 Part - 1: -
Average Profit= Rs. 15,000Capital Employed= Total Assets – External Liabilities= 1,70,000-60,000 = Rs. 1,

Question 14

Question 15 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 15 Chapter 3 of Class 12 Part - 1
15. The assets of a firm are Rs. 26,000 and liabilities other than capital are Rs. 6,000. The normal rate of profit in this type of business is 12½% whereas the firm earns a profit of Rs. 8,400. Calculate the amount of goodwill according to capitalisation method.
The solution of Question 15 Chapter 3 of Class 12 Part - 1: -
Average Profit= Rs. 8,400Capital Employed= Total Assets – External Liabilities= 26,000-6,000 = Rs. 20,000

Normal Profit = Capit

Question 15

Question 16 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 16 Chapter 3 of Class 12 Part - 1
16. The firm earns a profit of Rs. 20.000 and his invested capital amounts to Rs. 1,50,000. In the Class of business, normal rate of earning is 10%. Calculate goodwill according to capitalisation method.
The solution of Question 16 Chapter 3 of Class 12 Part - 1: -
Average Profit= Rs. 2000

Normal Profit = Capital employed
X
Normal Rate of Return

100

1,50,000
X
10

100

= Rs. 15,000
Super Profit= Average profit – Normal Profit= 20,000-15,0

Question 16

Question 17 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 17 Chapter 3 of Class 12 Part - 1
17. Amit, Vijay and Kuldeep are partners sharing profits and losses equally. From 1st April 2018 they decide to share future profits and losses in the ratio 3:2:1. Calculate Each partners gain/sacrifice due to change in ratio.
The solution of Question 17 Chapter 3 of Class 12 Part - 1: -
Old Ratio of Amit, Vijay and Kuldeep= 1:1:1New Ratio of Amit, Vijay and Kuldeep= 3:2:1
Sacrificing Share = Old Share - New share

Amit
=
1
-
3

3
6

=
2

Question 17

Question 18 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 18 Chapter 3 of Class 12 Part - 1
18. Sunny, Kashish and Sanjhi were partners sharing profits and losses in the ratio 2:2:1 which they decided to change to 5:3:2 with effect from 1st April, 2018. Indicate each partner's gain or sacrifice.
The solution of Question 18 Chapter 3 of Class 12 Part - 1: -
Old Ratio of Sunny, Kashi and Sanjhi= 2:2:1New Ratio of Sunny, Kashi and Sanjhi= 5:3:2Sacrificing Share = Old Share - New Share

Sunny
=
2
-
5

5
10

=
4 - 5

10

=
-1

Question 18

Question 19 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 19 Chapter 3 of Class 12 Part - 1
19. Javed and Salim share profits and losses in the ratio of 3:2. With effect from 1st April, 2018 they agreed to share profits equally. Calculate sacrificing or gaining share.annual subscription of Rs. 50.
The solution of Question 19 Chapter 3 of Class 12 Part - 1: -
Old Ratio of Javed and Salim= 3:2New Ratio of Javed and Salim= 1:1Sacrificing Share = Old Share - New Share

Javed
=
3
-
1

5
2

=
5 - 5

10

=
1
(Sacrifice)

Question 19

Question 20 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 20 Chapter 3 of Class 12 Part - 1
20. B, P and L are sharing profits in ratio of 2:3:1 in the firm. It is now agreed that they will share the future profits in the ratio 3:2:1. Calculate the sacrificing or gaining share partners.
The solution of Question 20 Chapter 3 of Class 12 Part - 1: -
Old Ratio of B, P and L= 2:3:1New Ratio of B, P and L= 3:2:1Sacrificing Share = Old Share – New Share

B
=
2
-
3

6
6

=
-1
(Gaining)

10

P
=
3
-
2

6
6

=
1
(Sacr

Question 20

Question 21 Chapter 3 of Class 12 Part - 1 VK Publication

Sarbjit Singh · Accepted Answer

Question 21 Chapter 3 of Class 12 Part - 1
21. M, N and O were partners sharing profits in the ratio 2:3:4. With effect from 1st April,2018 they agreed to share profits in the ratio 1:2:3. Calculate each partner's gain or sacrifice due to change in ratio.
The solution of Question 21 Chapter 3 of Class 12 Part - 1: -
Old Ratio of M, N and O = 2:3:4New Ratio of M, N and O = 1:2:3Sacrificing Ratio = Old Share - New Share

M
=
2
-
1

9
6

=
4 - 3

18

=
1
(Sacrifice)

18

Average Profit	=	Total Profits
Average Profit	=	Number of years

	=	5,000+8,000-3,000+6,000
	=	4

	=	16,000
	=	4

	=	4,000

V K Accountancy Class 12-2021-22 - NPO and Partnership-Solution Solutions Chapter No. 3 Change in profit sharing ratio among existing partners

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Topics & Questions Solved:

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

The solution of Question 1 Chapter 3 of Class 12 Part - 1: -

Usha Publication - Accountancy PSEB (Class 12) - Volume I - Solution

Usha Publication - Accountancy PSEB (Class 12) - Volume II - Solution

Question 2 Chapter 3 of Class 12 Part - 1 VK Publication

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

Question 4 Chapter 3 of Class 12 Part - 1 VK Publication

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

Question 13 Chapter 3 of Class 12 Part - 1 VK Publication

Question 14 Chapter 3 of Class 12 Part - 1 VK Publication

Question 15 Chapter 3 of Class 12 Part - 1 VK Publication

Question 16 Chapter 3 of Class 12 Part - 1 VK Publication

Question 17 Chapter 3 of Class 12 Part - 1 VK Publication

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