Chapter 3 Goodwill:Nature and Valuation-TS Grewal’s 2021
TS Grewal Question 23, 24, 25
Question 23
Average profit earned by a firm is Rs.1,00,000 which includes undervaluation of stock of Rs.40,000 on an average basis. the capital invested in the business is Rs.6,30,000 and the normal rate of return is 5%. Calculate goodwill of the firm on the basis of 5 times the super profit.
Solution:
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Question 24
Average profit earned by a firm is Rs.7,50,000 which includes overvaluation of stock of Rs.30,000 on an average basis. The capital invested in the business is Rs.42,00,000 and the normal rate of return is 15%. Calculate goodwill of the firm on the basis of 3 times the super profit.
Solution:
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Question 25
Ayub and Amit are partners in a firm and they admit Jaspal into partnership w.e.f. 1st April, 2021. They agreed to value goodwill at 3 years purchase of super profit method for which they decided to average profit of last 5 years. The profits for the last 5 years were:
Year ended——————– Net Profits (Rs.)
31st March, 2017 ————- 1,50,000
31st March, 2018 ————- 1,80,000
31st March, 2019 ————- 1,00,000 (including abnormal loss of 100000)
31st March, 2020 ————- 2,60,000 (including abnormal gain (profit) of 40000)
31st March, 2021 ————- 2,40,000
The firm has total assets of ₹20,00,000 and Outside Liabilities of ₹5,00,000 as on that date. Normal Rate of Return in similar business is 10%. Calculate value of goodwill.
Solution:
Ayub and Amit are partners in a firm
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Jump to other solutions of Goodwill:
Average Profit Method – Question number 1-6
Average Profit Method when Past Adjustments are Made – Question number 7-12
Weighted Average Profit Method – Question number 13-14
Super Profit method – Question number 15-22
Super Profit Method when Past Adjustments are Made – Question number 23-25
Capitalisation Method – Question number 26-33
Capitalisation of Super Profit – Question number 34-39