TS Grewal Solutions – Goodwill : Nature and Valuation
1 :- Goodwill is to be valued at three years’ purchase of four years’ average profit. Profits of the firm for the last four years ending 31st March were:
2022 – Rs 12,000, 2023 – Rs 18,000; 2024 – Rs 16,000; 2025 – Rs 14,000.
Calculate the amount of goodwill.
2 :- Profits for the five years ending 31st March are as follows:-
Year 2021 – Rs 4,00,000; Year 2022 – Rs 3,98,000; Year 2023 – Rs 4,50,000; Year 2024 – Rs 4,45,000 and Year 2025 – Rs 5,00,000.
Calculate the goodwill of the firm on the basis of 4 Years’ purchase of 5 years’ average profit.
3 :- Purav and Purvi are partners in a firm sharing profits and losses in the ratio of 2 : 1. They admit Parv into a partnership for 1/4th share on 1st April, 2025. For this purpose, goodwill is to be valued at four times the average annual profit of the previous four or five years, whichever is higher. The agreed profits for goodwill purposes of the past five years ended 31st March, are
Calculate the value of goodwill.
Question 1 to 3 (Average Profit Method)
Question 4 to 7 (Average Profit Method when Past Adjustments are made)
Question 8 to 9 (Weighted Average Profit Method)
Question 10 to 16 (Super Profit Method)
Question 17 to 21 (Calculation of Average Profit, Normal Rate of Return and Capital Employed)
Question 22 to 24 (Super Profit Method when Past Adjustments are Made)
Question 25 to 28 (Capitalisation Method)
Question 29 to 32 (Capitalisation Method)
Question 33 to 38 (Capitalisation of Super profit)