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Standard XII

Accountancy

Reassessment of Liabilities

Goodwill is t...

Question

Gupta and Bose had a firm in which they had invested ₹ 50,000. On an average, the profits were ₹ 16,000. The normal rate of return in the industry is 15%. Goodwill is to be valued at four years' purchase of profits in excess of profits @ 15% on the money invested. Calculate the value goodwill.

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Solution

Number of years’ purchase = 4

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Similar questions

Q. Gupta and Bose had a firm in which they had invested Rs.

50, 000

. On a average, the profits were Rs.

16, 000

. The normal rate in the industry is

15

. Goodwill is to be valued at four years purchase of profits in excess of profits @

15

on the money invested. Find the value of the goodwill.

Q. Goodwill is to be valued at three years' purchase of four years' average profit. Profits for last four years ending on 31st March of the firm were:
2016 − ₹ 12,000; 2017 − ₹ 18,000; 2018 − ₹ 16,000; 2019 − ₹ 14,000.
Calculate amount of Goodwill.

Profits of last four years are 12,000, 16,000, 23,000, 27,000 respectively. Calculate goodwill based on average profits of 2 years purchase

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. The goodwill of a firm is valued at

R s . 1, 35, 000

3

years purchase of super profit. Determine the missing values:
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= \frac{3, 60, 000}{3} = R s . 1, 20, 000

Normal Profit

= R s . . . . \times \frac{15}{100} = R s . . . .

Super Profit

=

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Normal Profit

= R s . 1, 20, 000 - R s . . . . = R s . . .

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=

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\times

No. of years Purchase.

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