Goodwill
Accountancy
Class : XII
Roll No. : Time - 00:45
Date : MM - 20
1. A and B are partners in a firm sharing profit and losses in the ratio of 2:1. They decide to admit C 3
as a new partner for 1/3 share on 01.04.2018. For this purpose goodwill of the firm is to be valued
on the basis of two years purchases of the average profits for the last 3 years. The profits of the
firm for the last three years were:
Year ending Profit/(Loss) ( )
31st March 2016 3,00,000
31st March 2017 (1,00,000)
31st March 2018 2,50,000
Additional Information:
(i) There was an abnormal loss of 30,000 in the year 31st March, 2016.
(ii) Closing Stock as on 31st March, 2018 was overvalued by 30,000.
2. Calculate the value of goodwill on the basis of 2½ years purchases of last five years’ average 3
profit. Profits/losses are as follows :
3. The capital employed in a firm is 10,00,000 and the market rate of interest is 15%. Annual 3
salary of the partners is 80,000. The profits of the last three years were 3,00,000; 4,00,000 and
5,00,000 respectively.
Calculate value of goodwill on the basis of two years’ purchase of the average super profits of last
three years.
4. A business earned average profits of 6,00,000 during the last few years. The normal rate of 3
profits in the similar type of business is 10%. The total value of assets and liabilities of the business
were 22,00,000 and 5,60,000 respectively.
Calculate value of goodwill of the firm by super profit method if the goodwill is valued at 2½ years’
purchase of super profits.
5. The average profit earned by a firm is 75,000 which include undervaluation of stock of 5,000 4
on an average basis. The capital invested in the business is 7,00,000 and the normal rate of return
is 7%. Calculate goodwill of the firm on the basis of 5 times the super profit.
6. A business has earned average profits of 1,00,000 during the last few years and the normal 4
rate of return in similar business is 10%. Find out the value of goodwill by:
(i) Capitalisation of super profit method and
(ii) Super profit method if the goodwill is valued at 3 years’ purchase of super profit.
The assets of the business were 10,00,000 and its external liabilities 1,80,000.