Treatment of Goodwill in Partnership Accounts-Test 1

The profits of last 5 years are Rs.75,000, Rs.90,000, Rs.80,000, Rs.1,00,000 and Rs.80,000. Find the value of goodwill, if its calculated an average profits of last 5 years on the basis of 3 years of purchase :

Capital employed in a business is Rs.1,50,000. Profits are Rs.50,000 and the normal rate of profit is 20%. The amount of goodwill as per capitalization method will be :

A firm has an average profit of Rs.60,000. Rate of return on Capital employed is Rs.12.5% p.a. Total capital employed in the firm was Rs.4,00,000. Goodwill on the basis of 2 years purchase of super profits is :

Weighted average method is calculating goodwill is used when :

X and Y are partners in a firm with capital of Rs.18,000 and Rs.20,000. Z was admitted for 1/3rd share in profits and brings Rs.24,000 as capital, calculate the amount goodwill :

Goodwill is to be calculated at 1.5 years of purchase of average profit of last 6 years. Profit earned during the first 3 years is Rs.30,000, Rs.20,000 and Rs.20,000 and losses suffered of Rs.5,000, Rs.3,000 and Rs.2,000 in the last three years. Goodwill will be :

A firm earned net profits during last 3 years as follows :

2001                             Rs.15,000

2002                             Rs.20,000

2003                             Rs.25,000

The capital investment in the firm is Rs.1,00,000. Having regard to risk involved 15% is the fair return on capital employed. Goodwill on basis of 2 years purchase of average Super profits earned during 3 years is :

What do you mean by purchasing years ?

What do you mean by Super Profit ?

The profits of last four years are :

2000                      Rs.40,000

2001                        Rs.50,000

2002                        Rs.60,000

2003                         Rs.50,000

The value of goodwill on the basis of 3 years purchase of average profits based on last 4 years :

Under Capitalization basis goodwill is calculated by :

Goodwill is to be calculated at one and half years purchase of average profit of last 5 years. The firm earned profits during first 3 years as, Rs.20,000, Rs.18,000 and Rs.9,000 and suffered losses of Rs.2,000 and 5,000 in last 2 years. Goodwill amount will be :

Extra amount over and above the saleable values of the identifiable assets that could be fetched by selling an existing firm as a going concern .

A firm earned net profits during last 3 years :

2004                  Rs.17,000

2005                   Rs.20,000

2006                    Rs.23,000

The Capital employed Rs.80,000. Return on capital employed 15%. Calculate the value of goodwill on the basis of 2 years purchase of average super profits earned :

Profits of last 3 years were Rs.6,000, Rs.13,000 and Rs.8,000. Calculate goodwill for 2 years of purchase.

An asset which is not fictitious but intangible in nature, having realizable value _______.

When there is no Goodwill Account in the books and goodwill is raised, _______ account will be debited.

Ravi and Suraj are partners having the profit sharing ratio 3 : 2 in a firm. They admitted Tarun in partnership and new profit sharing ratio of Ravi, Suraj and Tarun was decided at 2 : 2 : 1 respectively. Tarun brings in Rs.30,000 as goodwill. What would be the share of Ravi in goodwill ?

If old ratio between A & B is 1 : 1 & new ratio between A, B & C is 4 : 3 : 2 Recorded Goodwill of Rs.90,000 appears in B/S. Which accounts will be affected if they decide to write off goodwill immediately ?

What does not affect the goodwill of the firm ?

Which of the following statement is false ?

What would be the amount of actual average profit if goodwill is valued Rs.98,000 at 5 years purchase of super profit, normal rate of return is 10% and average capital employed is Rs.5,00,000 ?

Sacrificing ratio is used to distribute _____ on admission of a new partner :

On the admission of a new partner, it is decided that goodwill of the firm be valued at 2 years purchase of average profits for the past 3 years which amounted to Rs.8,620, Rs.9,430 and Rs.11,800 respectively. The value of goodwill is :

X and Y are partners sharing profits and losses in the ratio of 3 : 1. They admit Z as a partner who pays Rs.4,000 a goodwill. The new profit sharing ratio being 2 : 1 : 1. The goodwill will be credited to :

A and B together are sharing 2/3rd of the profits of the firm. C and D are sharing profits in the ratio of 3 : 2. Find the ratio of A : B : C 😀

A and B share profits and losses in the ratio 2 : 1.

C is admitted with 1/4th share in profits

C acquired 3/4th of his share in profits from A and 1/4th of his share from B. New profit and loss sharing ratio will be :

Rohan and Sohan are partner, in a firm sharing profit and losses in the ratio of 3 : 1, A new partner Mohan is admitted and he brings Rs.40,000 as goodwill. New profit sharing after admission is equal. The amount of goodwill to be shared by old partners as :-

The total capital of a partnership firm is Rs.6,00,000 and annual average profits of the firm are Rs.1,50,000. The normal rate of return in the business is considered at 20%. Find out the value of the goodwill at 3 years purchase of super profit.

Capital employed by M/s PQR is Rs.5,00,000. Rate of normal profit is 20%. Past four year’s profits were as follows :

Year                     Profit (Rs.)

1                         1,20,000

2                         1,80,000

3                         1,50,000

4                         2,00,000

Calculate value of goodwill at 2 years purchase using super profit method :