Question
11:
Bhaskar and Pillai are partners
sharing profits and losses in the ratio of 3 : 2. They
admit Kanika into partnership for 1/4th share in
profit. Kanika brings in her share of goodwill in
cash. Goodwill for this purpose is to be calculated at two years' purchase of
the average normal profit of past three years. Profits of the last three years
ended 31st March, were:
2020 - Profit
` 50,000 (including profit on sale of assets `
5,000).
2021 - Loss `
20,000 (including loss by fire ` 30,000).
2022 - Profit
` 70,000 (including insurance claim received ` 18,000
and interest on investments and Dividend received ` 8,000).
Calculate the value of goodwill. Also, calculate goodwill brought in by Kanika.
Answer:
Normal Profits for the year ended 31st March, 2020=(Total Profits-Profit on Sale of Assets)=
`(50,000-5,000)=
`45,000
Normal Profits for the year ended 31st March, 2021=(Loss by fire - Total Loss)=
`(20,000-30,000)=
`10,000
Normal Profit for the year ended 31st March, 2022=(Total Profit - Insurnace Claim Received-Interest on Invetsment -Dividend Received)
=
`(70,000-18,000-8,000)=
`44,000
Average Profits= `Normal Profits from the year ended 31st March,2020 to 31st March, 2022=
`45,000+10,000+44,000/3=
`33,000
Goodwill=Average Profits for the last three years × No. of years of Purchase=
`(33,000×2)=
`66,000
Kanika's Share of Goodwill=
`66,000×1/4=
`16,500
Question 12:
Sumit purchased Amit's business on 1st April, 2022. Goodwill was decided to be valued at two years' purchase of average normal profit of last four years. The profits for the past four years were:
|
Year Ended |
31st March, 2019 |
31st March, 2020 |
31st March, 2021 |
31st March, 2022 |
|
Profits (
`) |
80,000 |
1,45,000 |
1,60,000 |
2,00,000 |
Books
of Account revealed that:
(i) Abnormal loss of ` 20,000 was debited to Profit and Loss Account for the year
ended 31st March, 2019.
(ii) A fixed asset was sold in the year ended 31st March, 2020 and gain
(profit) of ` 25,000 was credited to Profit
and Loss Account.
(iii) In the year ended 31st March, 2021 assets of the firm were not insured
due to oversight. Insurance premium not paid was `
15,000.
Calculate the value of goodwill.
Answer:
Goodwill=Average Profit×No. of years' purchase
Goodwill
=1,41,250×2= ` 2,82,500
Working Notes:
WN: 1 Calculation
of Normal Profits
|
Year |
Profit/(Loss) ( `) |
Adjustment |
Normal Profit ( `) |
|
31 March, 2019 |
80,000 |
20,000 |
1,00,000 |
|
31 March, 2020 |
1,45,000 |
(25,000) |
1,20,000 |
|
31 March, 2021 |
1,60,000 |
(15,000) |
1,45,000 |
|
31 March, 2022 |
2,00,000 |
- |
2,00,000 |
|
|
5,65,000 |
||
WN: 2 Calculation of Average Profit
Average Profit=Total Profit for past given years Number of Years =5,65,000/4= ` 1,41,250
Question 13:
Profits of a firm for the year ended 31st March for the last five years were:
|
Year Ended |
31st March, 2018 |
31st March, 2019 |
31st March, 2020 |
31st March, 2021 |
31st March, 2022 |
|
Profits (
`) |
20,000 |
24,000 |
30,000 |
25,000 |
18,000 |
Calculate
value of goodwill on the basis of three years' purchase of Weighted Average
Profit after assigning weights 1, 2, 3, 4 and 5 respectively to the profits for
years ended 31st March, 2018, 2019, 2020, 2021 and 2022.
Answer:
|
Year |
Profit |
× |
Weight |
= |
Product |
|
2018 |
20,000 |
× |
1 |
= |
20,000 |
|
2019 |
24,000 |
× |
2 |
= |
48,000 |
|
2020 |
30,000 |
× |
3 |
= |
90,000 |
|
2021 |
25,000 |
× |
4 |
= |
1,00,000 |
|
2022 |
18,000 |
× |
5 |
= |
90,000 |
|
Total |
|
|
15 |
|
3,48,000 |
|
|
|
|
|
|
|
Weighted Average profit = total profit of past given years/Total of Weighted
Weighed Average profit =3,48,000/15=23,200
Number of years’
purchase = 3
Goodwill= Weighted Average profit × no. of purchases years’
Goodwill= 23,200×3 =69,600
Question 14:
Raman and Daman are partners sharing profits in the ratio
of 60 : 40 and for the last four years they have been
getting annual salaries of ` 50,000 and ` 40,000 respectively.
The annual accounts have shown the following net profit before charging partners'
salaries:
Year ended 31st March, 2020 − ` 1,40,000; 2021
− ` 1,01,000 and 2022
− ` 1,30,000.
On 1st April, 2022, Zeenu is admitted to the partnership for 1/4th share in
profit (without any salary). Goodwill is to be valued at four years' purchase
of weighted average profit of last three years (after partners' salaries);
Profits to be weighted as 1 : 2 : 3, the greatest
weight being given to the last year. Calculate the value of Goodwill.
Answer:
|
Year |
Profits before charging Salary ( `) |
Profits after charging Salary ( `) |
Weights |
Weighted Profits ( `) |
|
31st March, 2020 |
1,40,000 |
1,40,000- 90,000= 50,000 |
1 |
50,000 |
|
31st March, 2021 |
1,01,000 |
1,01,000- 90,000= 11,000 |
2 |
22,000 |
|
31st March, 2022 |
1,30,000 |
1,30,000- 90,000= 40,000 |
3 |
1,20,000 |
|
Total |
6 |
1,92,000 |
||
Weighted Average Profits=Total of Weighted Profits/Total Weights= `1,92,000/6= `32,000
Goodwill=Weighted Average Profits × No. of years of Purchase = `(32,000×4)= `1,28,000
Question 15: The capital of the firm of Anuj and Benu is `10,00,000 and the market rate of interest is 15%. Annual salary to the partners is `60,000 each. The profit for the last three years were `3,00,000, `3,60,000 and `4,20,000. Goodwill of the firm is to be valued on the basis of two years' purchase of last three years average super profit. Calculate the goodwill of the firm. (CBSE 2022)
Answer:
Average profit
= Total profit / number of years
=3,00,000+360,000+4,20,000/3
=3,60,000
Goodwill= Super profit × no. of purchases years’
Super profit =
average profit- partners salary- normal profit × no. of
purchases years’
=360,000-(60,000×2)-(10,00,000×15/100)×2
purchase
=90,000×2
=1,80,000
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
Click on below links for
12th TS Grewal’s Accountancy Solutions