CLASS 1 (ANSWERS)
A.1
A.2
A.3
(i)
1
(ii)
A.4
1)
2) Bank A/c Dr. 20,000
To Premium for G/W 20,000
3) Premium for G/W Dr. 20,000
2
A.5 JOURNAL
A.7 Rs. 60,000 A.8 Rs. 2,50,000
A.9 3 years A.10 Rs. 40,000
A.11 Rs. 1,20,000 A.12 Rs. 1,20,000 and Rs. 1,50,000
A.13 JOURNAL
Date Particulars L. F. Dr. (Rs.) Cr. (Rs.)
Bank A/c Dr. 1,95,000
To Z’s Capital A/c 1,65,000
To Premium for Goodwill A/c 30,000
(The amount of capital and goodwill/premium
brought in cash)
30,000
Premium for Goodwill A/c Dr. 15,000
To X’s Capital A/c 15,000
To Y’s Capital A/c
(Goodwill/premium transferred to old partners
capitals in sacrifice ratio i.e., equally)
3
CLASS 2 (ANSWERS)
A.1
1) Calculation of Goodwill at three years’ purchase of Average Profit:
Rs.1, 60, 000 Rs.1, 40, 000 Rs.2, 70, 000
Average Profit =
3
Rs.5, 70, 000
= Rs.1,90, 000
3
Average Normal Profit = Rs.1,90,000
Goodwill = Average Normal Profit No. of Years' Purchase
= Rs.1,90,000 3 = Rs.5,70,000.
2) Calculation of Goodwill at three years' purchase of Super Profit:
Normal Profit = Capital Employed Normal Rate of Return/100
= Rs.10,00,000 10/100 = Rs.1,00,000
Super Profit = Average Profit – Normal Profit
= Rs.1,90,000 – Rs.1,00,000 = Rs.90,000
Goodwill = Super Profit No. of Years' Purchase
= Rs.90,000 3 = Rs.2,70,000.
3) Calculation of Goodwill under Capitalisation of Super Profit:
100
Goodwill = Super Profit
Normal Rate of Return
= Rs.90,000 100/10 = Rs.9,00,000
4) Calculation of Goodwill under Capitalisation of Average Profit:
Goodwill = Total Capitalised Value of Business – Net Assets
Average Normal Profit 100
Total Capitalised Value of the Firm =
Normal Rate of Return
= 1,90,000/10% = 19,00,000
Net Assets = Total Assets (excluding goodwill) – Outside Liabilities
= Rs.11,00,000 – Rs.1,00,000 = Rs.10,00,000
Goodwill = Rs.19,00,000 – Rs.10,00,000 = Rs.9,00,000
A.2 Rs. 25,000 A.3 Rs. 1,32,000
A.4 Rs. 1,42,500 A.5 Rs. 1,50,000
A.6 Rs. 1,40,000 A.7 Rs. 2,00,000
A.8 JOURNAL ENTRIES
Date Particulars L.F. Dr.(Rs.) Cr.(Rs.)
Bank A/c Dr. 1,00,000
To Premium for Goodwill A/c 1,00,000
(The amount of goodwill/premium brought in
cash by Sarthi)
Premium for Goodwill A/c Dr. 1,00,000
To Arti’s Capital A/c 40,000
To Bharti’s Capital A/c 60,000
(The amount of goodwill/premium transferred
to old partner’s in sacrificing ratio)
1
Working Notes :
Calculation of Sacrificing Ratio:
Old Ratio – New Ratio
3 2 12 10 2
Arti = =
5 4 20 20
2 1 85 3
Bharti = =
5 4 20 20
Hence, Sacrificing Ratio of Arti and Bharti = 2 : 3
A.9 JOURNAL
Date Particulars L.F. Dr.(Rs.) Cr.(Rs.)
Bank A/c Dr. 3,40,000
To Tanu’s Capital A/c 3,00,000
To Premium for Goodwill A/c 40,000
(Being capital and premium brought in by new partner,
Tanu)
Premium for Goodwill A/c Dr. 40,000
To Manu’s Capital A/c 40,000
(Being premium for goodwill transferred to only
sacrificing partner, Manu)
A.10 Case – I - When the amount of goodwill premium is retained in the firm:
JOURNAL
Date Particulars L.F. Dr.(Rs.) Cr.(Rs.)
Bank A/c Dr. 30,000
To Premium for Goodwill A/c 30,000
(Premium for goodwill brought in by cash by
Thomas)
Premium for Goodwill A/c Dr. 30,000
To Gahlot’s Capital A/c 24,000
To Harrison’s Capital A/c 6,000
(Premium for goodwill credited to old partner’s
Capitals in sacrifice ratio i.e., 4 : 1)
Case – II - When the amount of goodwill premium is withdrawn fully by the old partners.
In addition to the two entries mentioned in (i) above, the following entry will also be passed:
JOURNAL
Date Particulars L.F. Dr.(Rs.) Cr.(Rs.)
Gahlot’s Capital A/c Dr. 24,000
Harrison’s Capital A/c Dr. 6,000
To Bank A/c 30,000
(The amount of goodwill premium withdrawn by the
old partners)
Case – III - When the amount of goodwill premium is withdrawn to the extent of 50% :
In addition to the two entries mentioned in (i) above, the following entry will also be passed:
2
JOURNAL
Date Particulars L.F. Dr. (Rs.) Cr. (Rs.)
Gahlot’s Capital A/c Dr. 12,000
Harrison’s Capital A/c Dr. 3,000
To Bank A/c 15,000
(50% of the amount of goodwill premium
withdrawn by the old partners)
Calculation of Sacrificing Ratio:
3 11 15 11 4
Gahlot =
5 25 25 25
2 9 10 9 1
Harrison =
5 25 25 25
Hence, Sacrifice Ratio is 4 : 1
A.11 Divisible Profit : 1,44,000, Balance c/d of A: 8,82,400 of B: 4,17,600
A.12 Capital Employed = Sundry Assests – External Liabilities
= 1,57,500 – 46,000
= Rs. 1,11,500
Capitalized Value = =
= Rs. 1,35,000
Goodwill = Capitalized Value – Capital Employed
= 1,35,000 – 1,11,500
= Rs. 23,500
A.13 Calculation of Adjusted Profit
Average Profit = 3,32,800 / 5
= Rs.66,560
Goodwill = Average Profit x No. of year Purchases
= 26,560 x 3 = Rs. 1,99,680
3
CLASS 3 (ANSWERS)
A.1
A.2
A.3
1
A.4
A.5
A.6
2
A.7
3
A.8
4
CLASS 4 (ANSWERS)
A.1
A.2 Rs. 1,42,500
A.3 Rs. 1,40,000
A.4 Rs. 1,32,000
A.5 Rs. 1,50,000
A.6 Rs. 2,00,000
A.7 Total Profits of last 5 years : Rs.
2013-14 4,00,000
2014-15 5,00,000
2015-16 ( – Rs.60,000 + Abnormal Loss Rs.2,30,000) 1,70,000
2016-17 1,50,000
2017-18 (Rs.2,50,000 – Abnormal Gain Rs.80,000) 1,70,000
13,90,000
Average Profit = Rs.13,90,000 5 = Rs.2,78,000
Goodwill = Average Profit Number of Year’s Purchase
= Rs.2,78,000 3 = Rs.8,34,000.
A.8 Rs.18, 000 Rs.20, 000 Rs.22, 000
Average Profit = Rs.20, 000
3
Normal Profit = Rs.60, 000 10 / 100 Rs.6, 000
Super Profit = Average Profit – Normal Profit
= Rs.20, 000 - Rs.6, 000 Rs.14, 000
Goodwill = Super Profit Number of Years' Purchase
= Rs.14, 000 3 Rs.42, 000 .
A.9 1. CALCULATION OF ACTUAL NORMAL PROFIT
Year Ended Profit (Rs.) Adjustment (Rs.) Normal Profit (Rs.)
31st March, 2016 2,00,000 (25,000) 1,75,000
31st March, 2017 1,70,000 50,000 2,20,000
31st March, 2018 2,10,000 ------ 2,10,000
31st March, 2019 2,30,000 ------ 2,30,000
31st March, 2020 2,50,000 ------ 2,50,000
10,85,000
1
Total normal profit Rs.10,85, 000
Actual Average Profit = Rs.2,17, 000.
Number of years 5
[Link] of Normal Profit:
Capital Employed = Rs.15,00,000
Normal Rate of Return = 10%
Normal Profit = Rs.15,00,000 10/100 = Rs.1,50,000.
3. Calculation of Super Profit:
Super Profit = Actual Average Profit – Normal Profit
= Rs.2,17,000 – Rs.1,50,000 = Rs.67,000.
4. Value of Goodwill:
Goodwill = Super Profit Number of Years' Purchase
= Rs.67,000 3 = Rs.2,01,000.
A.10 Goodwill = Super Profit Number of Years' Purchase
Rs.2,00,000 = Super Profit 4
Rs.2, 00, 000
Super Profit = Rs.50, 000
4
Normal Profit = Capital Employed Normal Rate of Return/100
= Rs.3,00,000 10/100 = Rs.30,000
Super Profit = Average Profit – Normal Profit
Rs.50,000 = Average Profit – Rs.30,000
Average Profit = Rs.50,000 + Rs.30,000 = Rs.80,000.
Note: As outside liabilities are not given, they are assumed to be nil. Thus, capital employed is
equal to Total Assets.
A.11 Goodwill = Super Profit Number of Years' Purchase
Rs.90,000 = Super Profit 2
Rs.90, 000
Super Profit = Rs.45, 000
2
Capital Employed = Assets – Outside Liabilities (Creditors)
= Rs.5,00,000 – Rs.90,000 = Rs.4,10,000
OR
= Partners' Capitals + General Reserve
= Rs.3,50,000 + Rs.60,000 = Rs.4,10,000
Normal Rate of Return = 10%
10
Normal Profit = Rs.4,10, 000 Rs.41, 000
100
Super Profit = Average Profit – Normal Profit
Average Profit = Super Profit + Normal Profit
= Rs.45,000 + RS.41,000 = Rs.86,000.
A.12 Goodwill = Super Profit 4 year’s Purchase
Rs.1,00,000 = Super Profit 4
Rs.1, 00, 000
Super Profit = Rs.25, 000
4
Normal Profit = Actual Average Profit – Super Profit
= Rs.80,000 – Rs.25,000 = Rs.55,000
100
Capital Employed = Normal profit
Normal rate of return
2
100
= Rs.55, 000 Rs.5, 50, 000
10
A.13 Average Profit 100
Total Capitalised Value of the Firm =
Normal Rate of Return
Rs.60, 000 100
= Rs.6, 00, 000
10
Net Assets = Total Assets – Liabilities
= Rs.7,20,000 – Rs.2,40,000 = Rs.4,80,000
Goodwill = Total Capitalised Value of the Firm – Net Assets
= Rs.6,00,000 – Rs.4,80,000 = Rs.1,20,000.
A.14 Capital Employed = Total Tangible Assets – Outside Liabilities
= Rs.14,00,000 – Rs.4,00,000 = Rs.10,00,000
Normal Profit = Capital Employed Normal Rate of Return/100
10
= Rs.10, 00, 000 Rs.1, 00, 000
100
Super Profit = Average Profit – Normal Profit
= Rs.1,50,000 – Rs.1,00,000 = Rs.50,000
Super Profit 100 Rs.50, 000 100
Goodwill = Rs.5, 00, 000
Normal Rate of Return 10
A.15 As per Capitalisation of Super Profit Method:
Super Profit 100 Rs.18,000 100
Goodwill = Rs.1,80, 000.
Normal Rate of Return 10
As per Super Profit Method:
Goodwill = Super Profit Number of Year’s Purchase
= Rs.18,000 3 = Rs.54,000.
Working Notes:
Capital Employed = Assets – External Liabilities
= Rs.10,00,000 – Rs.1,80,000 = Rs.8,20,000.
Normal Rate of Return 10
Normal Profit = Capital Employed Rs.8, 20, 000
10 0 100
= 82,000.
Super Profit = Average Profit – Normal Profit
= Rs.1,00,000 – Rs.82,000 = Rs. 18,000.
A.16 Capitalisation Method:
Total Capitalised Value of the Firm
Average Profit 100 RS .1,50, 000 100
= Rs.7,50, 000
Normal Rate of Return 20
Goodwill = Total Capitalised Value of Business – Capital Employed
= Rs.7,50,000 – Rs.5,00,000* = Rs.2,50,000.
*Capital Employed = Capitals of J and K = Rs.3,00,000 + Rs.2,00,000 = Rs.5,00,000.
Super Profit Method:
Normal Profit = Capital Employed Normal Rate of Return/100
= Rs.5,00,000 20/100 = Rs.1,00,000
Average Profit = Rs.1,50,000
Super Profit = Average Profit – Normal Profit
= Rs.1,50,000 – Rs.1,00,000 = Rs.50,000
Goodwill = Super Profit Number of Years' Purchase
= Rs.50,000 2 = Rs.1,00,000.
3
A.17
A.18
A.19
4
A.20
A.21
5
A.22
6
A.23