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Goodwill

Grade 12

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nandika
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20 views

Goodwill

Grade 12

Uploaded by

nandika
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Niraj Jha

Dc chowk & Sector - 16

GOODWILL
Class 12 - Accountancy
Time Allowed: 1 hour Maximum Marks: 20

1. Total assets of a firm including fictitious assets of ₹ 5,000 are ₹ 85,000. Liabilities of the firm are ₹ 30,000. The [1]
normal rate of return is 10% and the average profit of the firm is ₹ 8,000. Calculate goodwill as per the
capitalisation of super profit.

a) None of these b) ₹ 30,000

c) ₹ 25,000 d) ₹ 20,000
2. Accounting Standard ________ requires goodwill should be recorded in the books of accounts only when some [1]
money or money’s worth is paid for it.

a) 27 b) 10

c) 26 d) 23
3. Goodwill is valued [1]

a) at the time of change in profit-sharing ratio b) at the time of retirement or death of a


partner

c) at the time of admission of a partner d) All of these


4. On 1st April, 2019, an existing firm had assets of ₹ 75,000 including cash of ₹ 5,000. Its creditors amounted to ₹ [3]
5,000 on that date. The firm had a Reserve of ₹ 10,000 while Partners' Capital Accounts showed a balance of ₹
60,000. If Normal Rate of Return is 20% and goodwill of the firm is valued at ₹ 24,000 at four years' purchase of
super profit, find average profit per year of the existing firm.
5. The average profit earned by a firm is ₹ 75,000 which includes undervaluation of stock of ₹ 5,000 on an average [3]
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. Sumit purchased Amit's business on 1st April, 2019. Goodwill was decided to be valued at two years' purchase [3]
of average normal profit of last four years. The profits for the past four years were:

Year Ended 31st March, 2016 31st March, 2017 31st March, 2018 31st March, 2019

Profits (₹) 80,000 145,000 160,000 200,000

Books of Account revealed that:


i. An abnormal loss of ₹ 20,000 was debited to Profit and Loss Account for the year ended 31st March, 2016.
ii. A fixed asset was sold in the year ended 31st March, 2017 and gain (profit) of ₹ 25,000 was credited to Profit
and Loss Account.
iii. In the year ended 31st March, 2018 assets of the firm were not insured due to oversight. The insurance
premium not paid was ₹ 15,000.
Calculate the value of goodwill.

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Niraj Jha 9999800978
7. A business has earned average profit of ₹ 4,00,000 during the last few years and the normal rate of return in a [4]
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.
8. Dinesh and Mahesh are partners sharing profits and losses in the ratio of 3 : 2. They admit Ramesh into [4]
partnership for 1/4th share in profits. Ramesh brings in his share of goodwill in cash. Goodwill for this purpose
shall be calculated at two years' purchase of average normal profit of past three years. Profits of the last three
years were:
2017 - Profit ₹ 50,000 (including profits on sale of assets ₹ 5,000).
2018 - Loss ₹ 20,000 (including loss by fire ₹ 35,000).
2019 - Profit ₹ 70,000 (including insurance claim received ₹ 18,000 and interest on investments and dividend
received ₹ 8,000).
​Calculate the value of goodwill.

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Niraj Jha 9999800978

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