Question 36:
A business has earned average profit of ₹ 8,00,000 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 profit.
Assets of the business were ₹ 80,00,000 and its external
liabilities ₹ 14,40,000.
Answer:
Capital Employed=Total Assets - External Liabilities
=₹(80,00,000-14,40,000)=₹65,60,000
Normal Profits=Capital Employed×Normal Rate of Return/100
=₹65,60,000×10/100=₹6,56,000
Average Profits=₹8,00,000
Super Profits=Average Profits - Normal Profits
=₹(8,00,000 - 6,56,000)=₹1,44,000
(i)As per Capitalisation of Super Profit method,Goodwill=Super Profit×100Normal Rate of Return
= ₹ 1,44,000×100/10=₹14,40,000
(ii)As per Super Profit method,Goodwill=Super Profit × No. of years of purchase
= ₹ (1,44,000×3)=₹4,32,000
Question 37:
Rohit
and Hardik are partners sharing profits and losses equally. They decided to
admít Surya as a partner for 1/3 share. For this purpose, the goodwill of the
firm is to be valued. From the following information, calculate the value of
goodwill by:
(i)
Capitalisation of Average Profit Method.
(ii)
Capitalisation of Super Profit Method.
|
(a) Average
Capital Employed |
: |
₹ 6,00,000 |
|
(b)
Normal Rate of Return |
: |
12% |
|
(c)
Profit for last three years: |
: |
|
|
2021-22 |
: |
₹ 90,000 |
|
2022-23 |
: |
₹ 80,000 |
|
2023-24 |
: |
₹ 1,00,000 |
|
(d)
Assets (Excluding goodwill) : |
: |
₹ 10,00,000 |
|
(e)
Liabilities |
: |
₹ 4,00,000 |
[Ans.: Goodwill under both methods 1,50,000)
Answer:
(i) Capitalisation of Average Profit
Method.
|
Profit
for last three years: |
|
|
2021-22 |
₹ 90,000 |
|
2022-23 |
₹ 80,000 |
|
2023-24 |
₹ 1,00,000 |
|
Total
Profit = |
₹ 2,70,000 |
Average Profit = 2,70,000 ÷ 3 = 90,000
Capitalised Value of Firm = 90,000 × 100 ÷ 12
Capitalised Value of Firm =7,50,000
Actual Capital Employed = 10,00,000-4,00,000 =
6,00,000
Googlwill = Capitalised Value of Firm - Actual
Capital Employed
Googlwill
= 7,50,000 – 6,00,000 = 1,50,000
(ii) Capitalisation of Super Profit
Method.
Actual Capital Employed = 10,00,000-4,00,000 =
6,00,000
Normal Profit = Capital employed × Rate of
Return/100
Normal
Profit = 6,00,000 × 12/100 = 72,000
Super Profit = Average Profit - Normal Profit
Super
Profit = 90,000 – 72,000 = 18,000
Goodwill
=
18,000 × 100 ÷ 12 = ₹ 1,50,000
Question 38:
From the following information,
calculate value of goodwill of the firm:
(i) At three years' purchase of Average Profit.
(ii) At three years' purchase of Super Profit.
(iii) On the basis of Capitalisation of Super Profit.
(iv) On the basis of Capitalisation of Average profit.
Information:
(a) Average Capital Employed is ₹ 6,00,000.
(b) Net Profit/(Loss) of the firm for the last three years ended are:
31st March, 2025 − ₹ 2,00,000, 31st March, 2024 − ₹
1,80,000, and 31st March, 2023 − ₹ 1,60,000.
(c) Normal Rate of Return in similar business is 10%.
(d) Remuneration of ₹ 1,00,000 to partners is to be taken as charge
against profit.
(e) Assets of the firm (excluding goodwill, fictitious assets and non-trade
investments) is ₹ 7,00,000 whereas Partners' Capital is ₹ 6,00,000
and Outside Liabilities ₹ 1,00,000.
Answer:
(i) Goodwill
|
=Average Profit×No. of years' purchase
=80,000×3=₹ 2,40,000
|
(ii) Goodwill
|
=Super Profit×No. of years' purchase
=20,000×3=₹ 60,000
|
(iii) Goodwill
|
=Super Profit×100÷Normal Rate of Return
=20,000×100/10=₹ 2,00,000
|
(iv) Goodwill
|
=Capitalised Value-Net Assets
=8,00,000-6,00,000=₹ 2,00,000
|
Working Notes:
WN1: Calculation
of Average and Super Profits
Average Profit=Total Profits of past years given/No. of Years
=2,00,000+1,80,000+1,60,000/3
=₹ 1,80,000,
Average Profit (Adjusted) = ₹ 1,80,000 -
1,00,000 (Remuneration to partners)
= ₹ 80,000
Normal Profit=Capital Employed×Normal Rate of Return/100
=6,00,000×10/100=₹ 60,000
Super Profit=Average Profit (Adjusted)-Normal Profit
=80,000-60,000=₹ 20,000
WN2: Calculation of Capital Employed
Capital Employed = Total Assets - Outside Liabilities
= 7,00,000-1,00,000
= ₹ 6,00,000
Ts Grewal Solution 2025-2026
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Class 12 / Volume – I