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Standard XII

Accountancy

Settlement with the Executor

X Associate...

Question

X & Associates is a partnership firm, it intends to revalue its goodwill, average profit for the past five years is Rs. 15,000 per annum and goodwill is being valued 5 years purchase of super profit. What would be the value of the goodwill of the firm if normal profit of the firm is Rs.12,000?

Rs.15,000

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Rs.30,000

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Rs.20,000

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Rs.25,000

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Solution

The correct option is B Rs.15,000
Normal profit=12000
super profit =average profit - normal profit
=15000-12000=3000
then goodwill of the firm =super profit* no of purchase year
=3000*5
=15000

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X & Associates is a partnership firm, it intends to revalue its goodwill, average profit for the past five years is Rs. 15,000 per annum and goodwill is being valued 5 years purchase of super profit. What would be the value of the goodwill of the firm if normal profit of the firm is Rs.12,000?

The correct option is B Rs.15,000Normal profit=12000super profit =average profit - normal profit =15000-12000=3000then goodwill of the firm =super profit* no of purchase year =3000*5 =15000

The correct option is B Rs.15,000
Normal profit=12000
super profit =average profit - normal profit
=15000-12000=3000
then goodwill of the firm =super profit* no of purchase year
=3000*5
=15000