XII - Accounts
Worksheet - (Goodwill)
Q1 :- Kohli & Rohit are partners sharing profits and losses in ratio of 1:87. They agree to admit
Dhoni for 99% share. For this purpose, the value of goodwill is to be calculated on the basis of 15
years’ purchase of weighted average profit of last 3 years (weights are 2:1:1 respectively). Year ends
on 31st December every year. Profits are:-
2010:- Profit ` 65,000 (Excluding profit on sale of investment ` 10,000)
2011:- Loss ` 7,000 (Including insurance claim received ` 8,000)
2012:- Profit ` 40,000 (Opening stock undervalued by ` 10,000)
Also on 01.07.2011, a machinery costing ` 1,00,000 was charged to revenue on which depreciation
was 10% p.a. (SLM). Calculate Goodwill of the firm using Weighted average method.
Q2 :- On 01.04.2012, XYZ firm had total assets of 1,11,000 (including cash 11,000, fictitious assets
5,000, trade investment 15,000 and non trade investment 6,000) and liabilities 10,000. If normal
rate of return is 10% and Goodwill (by super profits method) is valued at ` 48,000 at eight years'
purchase of super profits, Find its
a) Average profit per year
b) Goodwill of firm (using capitalization method)
Q3 :- From the following information calculate goodwill on the basis of five years' purchase of super
profits calculated on the average profits of last four years.
Capital invested 1,50,000
Trading results :
2008 40,000
2009 36,000
2010 ( 6,000)
2011 50,000
Market rate of interest on investment 10%
Rate of risk return on capital invested in business 2%
Remuneration to partner (expected) 6,000 p.a.
Q4 :- The profits of the firm of A, B and C were as under :
Year ended 31st March Profits
2001 30,000 2002 46,000
2003 34,000 2004 45,000
You are supplied the following information :
(i) On 1st July, 2003 the firm purchased Machinery costing 10,000 but it was charged to revenue
inadvertently. Depreciation @ 9% p.a. on straight line basis was also not charged on this machinery.
(ii) During the year 2003-04, the personal expenses of 2,000 of each partner was debited to travelling
expenses of the firm.
(iii) Value of closing stock for the year ended 31st March, 2003 was found undervalued by 1,000.
(iv) An annual insurance premium of 500 was also not recorded in any of the years.
You are required to calculate adjusted profits of all the years and the value of goodwill on the basis of two
years purchase of weighted average profits. The weights of 1, 2, 3 and 4 may be assigned to the profits of
2001, 2002, 2003 and 2004 respectively.
Q5 :- Capital employed in a business is 2,00,000. During the year 2002, the firm earned a profit of `
30,000. Goodwill on the basis of 3 years purchase of super profit is 20,000. Find NRR.
Q6 :- A firm has an assets of 2,00,000 and NRR is 15%. Goodwill on the basis of 3 years purchase of
super profit is 36,000 and its average profit is 40,500. Find Current Liability.
CA Parag Gupta
Worksheet - (Goodwill)
Q1 :- Kohli & Rohit are partners sharing profits and losses in ratio of 1:87. They agree to admit
Dhoni for 99% share. For this purpose, the value of goodwill is to be calculated on the basis of 15
years’ purchase of weighted average profit of last 3 years (weights are 2:1:1 respectively). Year ends
on 31st December every year. Profits are:-
2010:- Profit ` 65,000 (Excluding profit on sale of investment ` 10,000)
2011:- Loss ` 7,000 (Including insurance claim received ` 8,000)
2012:- Profit ` 40,000 (Opening stock undervalued by ` 10,000)
Also on 01.07.2011, a machinery costing ` 1,00,000 was charged to revenue on which depreciation
was 10% p.a. (SLM). Calculate Goodwill of the firm using Weighted average method.
Q2 :- On 01.04.2012, XYZ firm had total assets of 1,11,000 (including cash 11,000, fictitious assets
5,000, trade investment 15,000 and non trade investment 6,000) and liabilities 10,000. If normal
rate of return is 10% and Goodwill (by super profits method) is valued at ` 48,000 at eight years'
purchase of super profits, Find its
a) Average profit per year
b) Goodwill of firm (using capitalization method)
Q3 :- From the following information calculate goodwill on the basis of five years' purchase of super
profits calculated on the average profits of last four years.
Capital invested 1,50,000
Trading results :
2008 40,000
2009 36,000
2010 ( 6,000)
2011 50,000
Market rate of interest on investment 10%
Rate of risk return on capital invested in business 2%
Remuneration to partner (expected) 6,000 p.a.
Q4 :- The profits of the firm of A, B and C were as under :
Year ended 31st March Profits
2001 30,000 2002 46,000
2003 34,000 2004 45,000
You are supplied the following information :
(i) On 1st July, 2003 the firm purchased Machinery costing 10,000 but it was charged to revenue
inadvertently. Depreciation @ 9% p.a. on straight line basis was also not charged on this machinery.
(ii) During the year 2003-04, the personal expenses of 2,000 of each partner was debited to travelling
expenses of the firm.
(iii) Value of closing stock for the year ended 31st March, 2003 was found undervalued by 1,000.
(iv) An annual insurance premium of 500 was also not recorded in any of the years.
You are required to calculate adjusted profits of all the years and the value of goodwill on the basis of two
years purchase of weighted average profits. The weights of 1, 2, 3 and 4 may be assigned to the profits of
2001, 2002, 2003 and 2004 respectively.
Q5 :- Capital employed in a business is 2,00,000. During the year 2002, the firm earned a profit of `
30,000. Goodwill on the basis of 3 years purchase of super profit is 20,000. Find NRR.
Q6 :- A firm has an assets of 2,00,000 and NRR is 15%. Goodwill on the basis of 3 years purchase of
super profit is 36,000 and its average profit is 40,500. Find Current Liability.
CA Parag Gupta
