You visited us 3 times! Enjoying our articles? Unlock Full Access!

Byju's Answer

Standard XII

Accountancy

Treatment in Partner's Capital Account-Change in PSR

Goodwill is t...

Question

Goodwill is to be calculated at one and a half years purchase of average profit for the last 5 years. The firm earned the profit during the first 3 years as, Rs. 20,000 , Rs. 18,000 and 2,000 and 5,000 in last 2 years, goodwill amount will be:

Rs. 12,000

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Rs. 10,000

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Rs. 15,000

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

None of the above

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is C Rs. 15,000
Average profits of 5 year= 20000 + 18000 +2000 +5000 +5000/5
= 10000
Calculation of Goodwill = 10000* 1.5
= 15000

Suggest Corrections

Similar questions

A partnership firm earned net profits during the last 3 years as follows:

2007 - Rs. 1,90,000

2008 - Rs. 2,20,000

2009 - Rs. 2,50,000

Calculate the value of goodwill on the basis of 2 years’ purchase of average profits basis during the above mentioned 3 years.

A, B and C share profits in the ratio 14:5:6. The goodwill of the firm is valued at 2 years' purchase of average profits of last 3 years. The profits of last 3 years are : Rs. 50,000; Rs. 55,000; Rs. 60,000. Calculate the value of goodwill.

Q. Capital of the firm of Sharma and Verma is Rs.

2, 00, 000

and the market rate of interest is

15

. Annual salary to partners is rs.

12, 000

each. the profits for the last three years were

R s .60, 000, R s . 72, 000

and

R s .84, 000

. Goodwill is to be at

2

years purchase of last

3

years average super profit. calculate goodwill of the firm.

Q. A partnership firm earned net profit during the last three years ended

31^{s t}

March, as follows:
2016 - Rs.

17, 000

2017 - Rs.

20, 000

2018 - Rs.

23, 000

. The capital investment in the firm throughout the above mentioned period has been Rs.

80, 000

. Having regard to the risk involved,

15

is considered to be a fair return on the capital. Calculate value of goodwill on the basis of two years purchase of average super profit earned during the above mentioned three years.

Q. The profits of last

5

years are

R s .60, 000

;

R s .67, 500

;

R s .52, 500

;

R s .75, 000

R s .60, 000

. Find the value of goodwill, if it is calculated on average profits of last

5

years on the basis of

3

years of purchase.

Join BYJU'S Learning Program

Goodwill is to be calculated at one and a half years purchase of average profit for the last 5 years. The firm earned the profit during the first 3 years as, Rs. 20,000 , Rs. 18,000 and 2,000 and 5,000 in last 2 years, goodwill amount will be:

The correct option is C Rs. 15,000Average profits of 5 year= 20000 + 18000 +2000 +5000 +5000/5 = 10000Calculation of Goodwill = 10000* 1.5 = 15000

The correct option is C Rs. 15,000
Average profits of 5 year= 20000 + 18000 +2000 +5000 +5000/5
= 10000
Calculation of Goodwill = 10000* 1.5
= 15000