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Account valution of goodwill

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13 views

Account valution of goodwill

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anjalirawlani4907
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Accounts [Total Marks 23]

Chapter 2. Valuation Of Goodwill


Q1. Each question carries 3 marks(1 To 5):-

1) Annu, Baby and Chetan are partners in a firm sharing profits and losses equally. They take Deep
into partnership from 1st April, 2023 for 1/5th share in the future profits. For this purpose, goodwill
is valued at 100% of the average annual profit of the previous three or four years, whichever is
higher.The annual profits for the purpose of goodwi|l for the past four years were:

Year Ended Profit (₹)

31st March, 2023 2,88,000;

31st March, 2022 1,81,000;

31st March, 2021 1,87,2000;

31st March, 2020 2,53,000;

Calculate the value of goodwill.

2) Average Profit Method when Past Adjustments are Made

Asin and Shreyas were partners sharing profits and losses in the ratio of 2 1. They admitted Shyam as
a partner for 1/5th share in profits. For this purpose Goodwill of the firm was to be valued on the
basis of three years purchase of last five years average profit. Profits for the last five years ended
31st March, were:

Year 2019 2020 2021 2022 2023


Profit (₹) 1,25,000 1,00,000 1,87,500 (62,500) 1,25,000

Calculate Goodwill of the firm after adjusting the following:

Profit of 2019-20 was calculated after charging ₹25,000 for abnormal loss of goods by fire.

3) Bhaskar and Pillai are partners sharing profits arid losses in the ratio of 3 :2 They admit Kanika

Info partnership for 1/4th share in profit. Kanika brings her share of good will in cash. Goodwill for
this purpose is to be calculated at two years purchase of thie average normal profit of past three
years. Profits of the last three years ended 31st March, were

2021--Profit ₹50,000 (including profit on sale of assets ₹5,000).

2022-Loss ₹20,000 (including loss by fire ₹ 30,000).

2023-Profit ₹70,000 (including insurance claimn received ₹18,000 anid interest on investrents and

Dividend received ₹ 8,000).

Calculate the value of goodwill.also calculate goodwill brought by Kanika.

4) Weighted Average Profit Method

Profits of a firm for the year ended 31st March for the last five years were:
Year Ended 31st 31st 31st 31st 31st
March,2019 March,2020 March,2021 March,2022 March,2023
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, 2019, 2020,

2021, 2022 and 2023.

5) The capital of the firm of Anuj and Benu is p 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.

Q2)From the following particulars, calculate value of goodwill of a firm by Capitalisation of Average
Profit Method:

(i) Profits of last five consecutive years ending 31st March, are: {Marks 4}

2023--₹ 54,000; 2022- ₹ 42,000; 2021-₹ 39,000; 2020-₹ 67,000 and 2019-₹ 59,000.

(ii) Capitalisation rate 20%,

(iii) Net assets of the firm ₹ 2,00,000.

Q3)Average profit of a firm during the last few years is ₹ 1,50,000. In similar business, the normal
rate of return is 10% of the capital employed. Calculate the value of goodwill by capitalisation of
super profit method if super profits of the firm are ₹ 50,000. {Marks 4}

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