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12th | Nature And Valuation of Goodwill | Question No.  31 To 35 |  Ts Grewal Solution 2022-2023

Question 31:

A business has earned average profit of  `4,00,000 during the last few years and the normal rate of return in similar business is 10%. Find 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 profits.
Assets of the business were
`40,00,000 and its external liabilities  ` 7,20,000. (Delhi, 2013 C)

Answer:


Average Profit  ` 4,00,000
Normal Rate of Return – 10%

(i) Goodwill by Capitalisation of Super profit

goodwill

=super profit ×100/ normal rate of return

Capital employed

= assets – external liabilities

=40,00,000-7,20,000
=32,80,000

 

Normal profit

 

= Capital employed×Normal rate of return/100

=32,80,000×10/100

Super

 

Profit = Actual Profit – Normal Profit
= 4,00,000 – 3,28,000

=  ` 72,000

Goodwill

 

=72,000×100/10

= ` 7,20,000


(ii) Super Profit Method if the goodwill is valued at 3 years’ purchase of super profits

Goodwill

 

= Super Profit ×Purchases

=72,000×3

=2,16,000


Therefore, Goodwill is valued at  ` 2,16,000

 

Question 32: A firm earns profit of `5,00,000. Normal Rate of Return in a similar type of business is 10%. The value of total assets (excluding goodwill) and total outsiders' liabilities as on the date of goodwill are `55,00,000 and `14,00,000 respectively. Calculate value of goodwill according to Capitalisation of Super Profit Method as well as Capitalisation of Average Profit Method.

Answer;


Capitalised value of average profit =500,000×100/10=50,00,000

Actual capital employed= Assets – liabilities

=50,00,000-41,00,000

=9,00,000

Normal profit = 41,00,000×10/100

Super profit=5,00,000-4,10,000=90,000

Value of goodwill under super profit method

=90,000×100/10=9,00,000

Question 33:


On 1st April, 2018, a firm had assets of  ` 1,00,000 excluding stock of  ` 20,000. The current liabilities were  ` 10,000 and the balance constituted Partners' Capital Accounts. If the normal rate of return is 8%, the Goodwill of the firm is valued of  ` 60,000 at four years' purchase of super profit, find the actual profits of the firm. (CBSE Sample paper, 2018)

Answer:


Total Assets of the firm=(Sundry Assets + Stock)= `(1,00,000+20,000)= `1,20,000

Current Liabilities of the firm= `10,000

Capital Employed=(Total Assets - Current Liabilities)= `(1,20,000 - 10,000)= `1,10,000

Normal Profits=Capital Employed × Normal Rate of Return/100= `1,10,000×8/100= `8,800

Goodwill = Super Profits × No. of years of purchase

60,000= Super Profits × 4

Super Profits= `60,000/4= `15,000

Super Profits= Average Actual Profits - Normal Profits

15,000=Average Actual Profits - 8,800

Average Actual Profits= `(15,000+8,800)= `23,800

 

Question 34: Average profit of a firm during the last few years is `1,50,000. In similar business, the normal rate of return is 10% of the capital employed. Calculate the value of goodwill by capitalisation of super profit method if super profits of the firm are `50,000. (CBSE 2020)

Answer:


Super Profit = 50,000

Goodwill = Super Profit ×100/Rate of Return

Goodwill = 50,000 ×100/10

Goodwill = 5,00,000

Question 35: Raja Brothers earn an average profit of `30,000 with a capital of `2,00,000. The normal rate of return in the business is 10%. Using capitalisation of super profit method, workout the value of the goodwill of the firm. (NCERT)


Answer:


Calculation of goodwill under capitalization of super profit method

Capital value = super profit ×100/rate of return

Normal profit = capital employed × rate of return/100

Normal profit = 200,000×10/100=20,000

Super profit = 30,000-20,000

Super profit = 10,000

Goodwill= 10,000×100/10=1,00,000

Ts Grewal Solution 2022-2023

Click below for more Questions

Class 12 / Volume – I

Chapter 3 – Nature And Valuation fo Goodwill

 

Question No. 1 To 5
Question No. 5 To 10
Question No. 11 To 15
Question No. 16 To 20
Question No. 21 To 25
Question No. 26 To 30
Question No. 31 To 35
Question No. 36 To 39

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12th TS Grewal’s Accountancy Solutions

Ts Grewal Solution 2022-2023

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