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.

Page No 3.17:

Answer:

Number of years’ purchase = 3

Page No 3.17:

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

Average Profits=Total ProfitsNumber of YearsAverage Profits=3,37,5003=1,12,500

Goodwill=Average Profits × Numbers' of Year PurchaseGoodwill=1,12,500×2=2,25,000



Page No 3.18:

Answer:

Calculation of average profits for the last three years

Average Profits=Total ProfitsNumber of YearsAverage Profits=2,88,000 + 1,81,800 + 1,87,2003=Rs 2,19,000

Calculation of average profits for the last four years

Average Profits= Total ProfitsNumber of YearsAverage Profits= 2,88,000 + 1,81,800 + 1,87,200 + 2,53,2003=Rs 2,27,550

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.

Page No 3.18:

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

Average Profits=Total ProfitsNumber of Years'=50,00,0005=Rs 10,00,000

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

Page No 3.18:

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)

Average Profits= Total ProfitsNumber of YearsAverage Profits= 1,50,000+ 3,50,000 + 5,00,000+ 7,00,000 + (5,25,000)5 = 11,75,0005=2,35,000

Goodwill = Average Profits × No. of Years' PurchaseGoodwill = 2,35,000 × 4 = Rs 9,40,000

Page No 3.18:

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

 

 

 

 

 

 

Page No 3.18:

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

 

 

 

 

 

 



Page No 3.19:

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

 Weighted Average Profit=Total Weighted ProfitsTotal Weights=1,92,0006=32,000

Goodwill = Weighted Average Profits × No. of Years' PurchaseGoodwill= 32,000×4=1,28,000

Page No 3.19:

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

Page No 3.19:

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.

Page No 3.19:

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

 

 

 

 

 

 

Page No 3.19:

Answer:

Number of years’ purchase = 3

Page No 3.19:

Answer:


 

Number of years’ purchase = 2



Page No 3.20:

Answer:



Number of years’ purchase = 2

Page No 3.20:

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

Page No 3.20:

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

Page No 3.20:

Answer:

Number of years’ purchase = 3

Page No 3.20:

Answer:

Number of years’ purchase = 4

Page No 3.20:

Answer:

Goodwill=Super Profit×Number of Years' Purchase60,000=Super Profit×4Super Profit=Rs 15,000Normal Profit=Capital Employed×Normal Rate of Return100Capital Employed=Capital+Reserves=60,000+50,000=Rs 1,10,000Normal Profit=1,10,000×8100=Rs 8,800Super Profit=Average Profit-Normal Profit15,000=Average Profit-8,800Average Profit=Rs 23,800

Page No 3.20:

Answer:

Correct Average Profit= Average Profit + Undervaluation of Stock                                       = 95,000+ 10,000= Rs 1,05,000Normal Profit= Capital Employed ×  Normal Rate of Return100                       =9,00,000× 9100= Rs 81,000Super Profit= Average Profit-Normal Profit                    =1,05,000-  81,000= Rs 24,000Goodwill= Super Profit × Number of Years' Purchase               = 24,000× 8=Rs 1,92,000

Page No 3.20:

Answer:

Page No 3.20:

Answer:

Capital Employed = Total Tangible Assets – Outside Liabilities

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

Normal Profit=Capital Employed×Normal Rate of Return 100

Normal Profit=20,00,000×10 100=Rs 2,00,000

Average Profit = Rs 3,00,000

Super Profit= Average Profit– Normal Profit

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

Goodwill=Super Profit×100 Normal Rate of ReturnGoodwill=1,00,000×10010=Rs 10,00,000



Page No 3.21:

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

Normal Profit=Average Capital Employed×Normal Rate of Return 100

Normal Profit=10,00,000 ×10 100=Rs 1,00,000

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:
 
Goodwill=Super Profit×100 Normal Rate of ReturnGoodwill=50,000×100 10=Rs 5,00,000

Page No 3.21:

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 

Page No 3.21:

Answer:

(i) Calculation of goodwill through Capitalisation Method:
 

Capitalised Value of the Firm=Average Profit ×100 Normal Rate of ReturnCapitalised Value of the Firm=4,50,000 ×100 20=22,50,000
 
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:
 
Normal Profit=Average Capital Employed × Normal Rate of Return 100=15,00,000 × 20 100=3,00,000
 
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

Page No 3.21:

Answer:

(i) Calculation of goodwill at three years’ purchase of average profit:
Average Profits = Total ProfitsNumber of YearsAverage Profits = 2,25,000 + (1,87,500) + 6,37,5003 = 6,75,0003=2,25,000
       Now, average profits as ascertained above               =Rs 2,25,000       Less: Remuneration of partners (3,750 × 12 × 2)   =  Rs 90,000               Actual Average Profit                                     =Rs 1,35,000                   

      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)

Normal Profit=Average Capital Employed  ×  Normal Rate of Return 100Normal Profit=7,50,000  ×  15 100=1,12,500

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:
 
Goodwill =Super Profit ×100 Normal Rate of ReturnGoodwill =22,500 ×100 15=Rs 1,50,000

(iv) Calculation of goodwill on the basis of Capitalisation of Average Profit:
 
Capitalised Value of the Firm=Average Profit ×100 Normal Rate of ReturnCapitalised Value of the Firm=1,35,000 ×100 15=Rs 9,00,000

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

Page No 3.21:

Answer:

Page No 3.21:

Answer:

(i)
Goodwill=Average Profits×Number of Years' PurchaseAverage Profits=Sum of Last Years' Profits -Losses (if any)Number of Years                          =7,50,000-6,25,000+21,25,0003=Rs 7,50,000Correct Average Profits=Average Profits-Remuneration                                        =7,50,000-(12,500×12×2)=Rs 4,50,000Goodwill=4,50,000×3=Rs 13,50,000

(ii)
Goodwill=Super Profit×Number of Years' PurchaseSuper Profit=Average Profit-Normal ProfitAverage Profit=Rs 4,50,000Normal Profit=Average Capital Employed×Normal Rate of Return100                      =25,00,000×15100=Rs 3,75,000Super Profit=4,50,000-3,75,000=Rs 75,000Goodwill=75,000×3=Rs 2,25,000

(iii)
Goodwill=Super Profit×100Normal Rate of Return                     =75,000×10015=Rs 5,00,000

(iv)
Goodwill= Capitalised Value of Firm-Net AssetsCapitalised Value of Firm=Average Profit×100Normal Rate of Return                                            =4,50,000×10015=Rs 30,00,000Net Assets=Assets (excluding goodwill)-Liabilities                   =30,00,000-2,50,000=Rs 27,50,000Goodwill=30,00,000-27,50,000=Rs 2,50,000



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