Double Entry Book Keeping Ts Grewal (2016) Solutions for Class 12 Commerce Accountancy Chapter 3 Goodwill: Concept And Mode Of Valuation are provided here with simple step-by-step explanations. These solutions for Goodwill: Concept And Mode Of Valuation are extremely popular among class 12 Commerce students for Accountancy Goodwill: Concept And Mode Of Valuation Solutions come handy for quickly completing your homework and preparing for exams. All questions and answers from the Double Entry Book Keeping Ts Grewal (2016) Book of class 12 Commerce Accountancy Chapter 3 are provided here for you for free. You will also love the ad-free experience on Meritnation’s Double Entry Book Keeping Ts Grewal (2016) Solutions. All Double Entry Book Keeping Ts Grewal (2016) Solutions for class 12 Commerce Accountancy are prepared by experts and are 100% accurate.

#### Answer:  Number of years’ purchase = 3 #### Answer:

Calculation of Average Profit
2012–13 = 1,00,000 – 12,500 = 87,500

2013–14 = 1,25,000 + 25,000 = 1,50,000

2014–15 = 1,12500 – 12,500 = 1,00,000

Total Profits for last three years = 3,37,500

#### Answer:

Calculation of average profits for the last three years

Calculation of average profits for the last four years

Average Profits for last four years is higher than the Average Profits for last three years. Thus, Goodwill of the firm is 2,27,550.

#### Answer:

 Year Profit 2013-14 8,00,000 2012-13 15,00,000 2011-12 18,00,000 2010-11 (4,00,000) 2009-10 13,00,000 Total Profit 50,00,000

Goodwill = Avg. Profits $×$ No. of Years' Purchase
= 10,00,000 $×$ 3
= Rs 30,00,000

#### Answer:

 Year 2009–10 2010–11 2011–12 2012–13 2013–14 Profit/Loss 1,50,000 3,50,000 5,00,000 7,00,000 (6,00,000) Add: Wrong Debit 1,00,000 Less: Depreciation (25,000) Total 1,50,000 3,50,000 5,00,000 7,00,000 (5,25,000)

#### Answer:

 Year Profit × Weight = Product 2012 20,000 × 1 = 20,000 2013 24,000 × 2 = 48,000 2014 30,000 × 3 = 90,000 2015 25,000 × 4 = 1,00,000 2016 18,000 × 5 = 90,000 Total 15 3,48,000  #### Answer:

Calculation of Normal Profit

 Year Particulars Normal Profit 2005 25,000 - 5000 (Management Cost) = 20,000 2006 27,000 + 10,000 (Plant Repair) – 1,000 (Deprecation) – 1000 (Closing Stock)  - 5000 (Management Cost) = 30,000 2007 46,900 – 900 (Deprecation) +1,000 (Opening Stock) – 2,000 (Closing Stock) – 5,000 (Management Cost) = 40,000 2008 53,810 – 810 (Deprecation) + 2,000 (Opening Stock) – 5,000 (Management Cost) = 50,000

Calculation of Weighted Profit

 Year Normal Profit × Weight = Product 2005 20,000 × 1 = 20,000 2006 30,000 × 2 = 60,000 2007 40,000 × 3 = 1,20,000 2008 50,000 × 4 = 2,00,000 Total 10 4,00,000  #### Answer:

Goodwill = Weighted Average Profit × No. of years purchase

 Year Profit before Salary Salary Profit after Salary Weights Weighted Profit A B C = A – B D E = C × D 2012 1,40,000 90,000 50,000 1 50,000 2013 1,01,000 90,000 11,000 2 22,000 2014 1,30,000 90,000 40,000 3 1,20,000 Total 6 1,92,000

#### Answer: Year Actual Profit + Abnormal Loss Non-recurring – Abnormal Gain Non-recurring = Normal Profit 2013 50,000 + Nil – 5,000 = 45,000 2014 (20,000) + 30,000 – Nil = 10,000 2015 70,000 + Nil – 18,000+8,000 = 44,000 Normal Profit for 3 Years 99,000 Number of years’ purchase = 2  #### Answer:

Calculation of Average Profit for Five Years Calculation of Average Profit for Four Years Average Profit of four years is taken to compute the value of goodwill of the firm. This is because Average Profit of four years is more than the Average Profit of five years. #### Answer:

 Year Profit before Partners’ Remuneration – Partners’ Remuneration = Profit after Partners’ Remuneration 2007-08 2,00,000 – 90,000 = 1,10,000 2008-09 2,30,000 – 90,000 = 1,40,000 2009-10 2,50,000 – 90,000 = 1,60,000

 Year Profit × Weight = Product 2007-08 1,10,000 × 1 = 1,10,000 2008-09 1,40,000 × 2 = 2,80,000 2009-10 1,60,000 × 3 = 4,80,000 Total 6 8,70,000  #### Answer:   Number of years’ purchase = 3 #### Answer:    Number of years’ purchase = 2 #### Answer:    Number of years’ purchase = 2 #### Answer: Capital Employed = Total Assets Creditors

= 75,000 5,000 = Rs 70,000 Goodwill of the firm = Rs 24,000

Number of years’ purchase = 4 Or, 24,000 = Super Profit × 4  #### Answer:  Year Profit before Partners’ Remuneration – Partners’ Remuneration = Actual Profit after Remuneration 2013–14 1,70,000 – 1,00,000 = 70,000 2014–15 2,00,000 – 1,00,000 = 1,00,000 2015–16 2,30,000 – 1,00,000 = 1,30,000  Number of years’ purchase = 2 #### Answer:    Number of years’ purchase = 3 #### Answer:   Number of years’ purchase = 4  #### Answer:    #### Answer:

Capital Employed = Total Tangible Assets – Outside Liabilities

Capital Employed = 28,00,000 – 8,00,000 = Rs 20,00,000

Average Profit = Rs 3,00,000

Super Profit= Average Profit– Normal Profit

Super Profit= 3,00,000 – 2,00,000 = 1,00,000

#### Answer:

(i) Calculation of goodwill through Super Profit Method:

Average Profit = Rs 1,50,000

Normal Rate of Return = 10%

Average Capital Employed = Rs 10,00,000

Super Profit = Average Profit – Normal Profit

Super Profit = 1,50,000 – 1,00,000 = Rs 50,000

Goodwill = Super Profit × No. of Years’ Purchase

Goodwill = 50,000 × 2 = Rs 1,00,000

(ii) Calculation of goodwill through Capitalisation of Super Profit Method:

#### Answer:

(i) Calculation of Goodwill by Capitalisation of Super Profit Method   Profit of the firm = Rs 5,00,000  (ii) Calculation of Goodwill by Capitalisation of Average Profit Method    #### Answer:

(i) Calculation of goodwill through Capitalisation Method:

Average Capital Employed = 9,00,000 + 6,00,000 = 15,00,000

Goodwill = Capitalised Value of the Firm – Average Capital Employed

Goodwill = 22,50,000 – 15,00,00 = Rs 7,50,000

(ii) Calculation of goodwill through Super Profit Method:

Average Profit = 4,50,000

Super Profit = Average Profit – Normal Profit

Super Profit = 4,50,000 – 3,00,000 = Rs 1,50,000

Goodwill = Super Profit × No. of Years’ purchase

Good will = 1,50,000 × 2 = 3,00,000

#### Answer:

(i) Calculation of goodwill at three years’ purchase of average profit:

Goodwill = Actual Average Profit × No. of Years’ Purchase

Goodwill = 1,35,000 × 3 = Rs 4,05,000

(ii) Calculation of goodwill at three years’ purchase of super profit:

Average Profit = Rs 1,35,000 (as calculated above)

Super Profit = Average Profit – Normal Profit

Super Profit = 1,35,000 – 1,12,500 = Rs 22,500

Goodwill = Super Profit × No. of Years’ Purchase

Goodwill = 22,500 × 3 = 67,500

(iii) Calculation of goodwill on the basis of Capitalisation of Super Profit:

(iv) Calculation of goodwill on the basis of Capitalisation of Average Profit:

Net Assets = Total Assets (excluding goodwill) – Outsider’s Liabilities

Net Assets = 9,00,000 – 75,000 = Rs 8,25,000

Goodwill = Capitalised Value of the Firm – Net Assets

Goodwill = 9,00,000 – 8,25,000 = Rs 75,000

#### Answer:    #### Answer:

(i)

(ii)

(iii)

(iv)

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