T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 2 - Goodwill: Nature and Valuation
T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 2 - Goodwill: Nature and Valuation Page/Excercise 2.20
T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 2 - Goodwill: Nature and Valuation Page/Excercise 2.21
Goodwill = Average Profit × Number of years purchase
Goodwill = 2,00,000 × 1.5 = Rs.3,00,000
Working Notes:
1.
|
Calculation of Profits (last 3 years) |
|
|
Year |
Profit |
|
1st Year |
1,00,000 |
|
2nd year |
2,00,000 (1,00,000 × 2) |
|
3rd year |
3,00,000 (2,00,000 ×1.5) |
|
Total |
6,00,000 |
2.
Calculation Of Average profit
Goodwill = Normal Average Profit × Number of years' purchase
Normal Average Profit = 60,0000
Working Note:
|
Year |
Actual Profit |
+ |
Abnormal Loss Non-Recurring |
- |
Abnormal Gain Non-Recurring |
= |
Normal Profit |
|
2018 |
30,000 |
+ |
40,000 |
- |
Nil |
= |
70,000 |
|
2017 |
(80,000) |
+ |
1,10,00 |
- |
Nil |
= |
30,000 |
|
2016 |
1,10,000 |
+ |
Nil |
- |
30,000 |
= |
80,000 |
|
Normal Profits for last 3 years |
= |
1,80,000 |
|||||
Goodwill = Normal Average Profit × Number of years' of purchase
Working Notes:
|
Year |
Actual Profit |
+ |
Abnormal Loss Non-Recurring |
- |
Abnormal Gain Non-Recurring |
= |
Normal Profit |
|
2016 |
50,000 |
+ |
Nil |
- |
5,000 |
= |
45,000 |
|
2017 |
(20,000) |
+ |
30,000 |
- |
Nil |
= |
10,000 |
|
2018 |
70,000 |
+ |
Nil |
- |
18,000 + 8,000 |
= |
44,000 |
|
Normal Profits for last 3 years |
|
99,000 |
|||||
|
|
|||||||
Computation of Goodwill:
Working Notes:
Calculation of Average Profit (Five Years)
|
Year |
Profit |
|
2013-14 |
14,000 |
|
2014-15 |
15,500 |
|
2015-16 |
10,000 |
|
2016-17 |
16,000 |
|
2017-18 |
15,000 |
|
Total Profit |
70,500 |
Calculation of Average Profit (Four Years)
|
Year |
Profit |
|
2014-15 |
15,500 |
|
2015-16 |
10,000 |
|
2016-17 |
16,000 |
|
2017-18 |
15,000 |
|
Total Profit |
56,500 |
Average Profits (4 Years) > Average Profits (5 Years)
Accordingly, for Goodwill Valuation, Average profits = 14,125
Goodwill = Average Profit × Number of years Purchase
Goodwill = 1,41,250 ×2 = Rs.2,82,500
Working Notes:
1.
|
Calculation Of Normal Profits (31st March Closed) |
||||
|
Years |
2015 |
2016 |
2017 |
2018 |
|
Profit /Loss |
80,000 |
1,45,000 |
1,60,000 |
2,00,000 |
|
Adjustment |
20,000 |
(25,000) |
(15,000) |
|
|
Normal Profit |
1,00,000 |
1,20,000 |
1,45,000 |
2,00,000 |
Total of Normal Profit = 1,00,000 + 1,20,000 + 1,45,000 + 2,00,000
= Rs.5,65,000
2.
T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 2 - Goodwill: Nature and Valuation Page/Excercise 2.22
Goodwill = Average Profit × Number of years Purchase
Goodwill = Rs.1,00,000 ×3 = Rs.3,00,000
Working Notes:
1.
|
|
Calculation Of Normal Profits (31st March Closed) |
||||
|
Years |
2014 |
2015 |
2016 |
2017 |
2018 |
|
Profit /Loss |
(90,000) |
1,60,000 |
1,50,000 |
65,000 |
1,77,000 |
|
Adjustment |
-- |
(50,000) |
20,000 |
85,000@ |
(17,000) |
|
Normal Profit |
(90,000) |
1,10,000 |
1,70,000 |
1,50,000 |
1,60,000 |
Total of Normal Profit = (-90,000) + 1,10,000 + 1,70,000 + 1,50,000 + 1,60,000
= Rs.5,00,000
@Adjustment Amount
|
Overhauling cost of second hand machinery (Wrongly accounted as expense instead of capital expenditure) |
Rs.1,00,000 |
|
Less:
Depreciation to be debited from Profit andLoss Account |
Rs.15,000 |
|
Adjustment Normal profit added |
Rs.85,000 |
2.
Working Notes:
|
Year |
Profit |
× |
Weight |
= |
Product |
|
2014 |
20,000 |
× |
1 |
= |
20,000 |
|
2015 |
24,000 |
× |
2 |
= |
48,000 |
|
2016 |
30,000 |
× |
3 |
= |
90,000 |
|
2017 |
25,000 |
× |
4 |
= |
1,00,000 |
|
2018 |
18,000 |
× |
5 |
= |
90,000 |
|
Total |
15 |
|
3,48,000 |
||
Working Notes:
|
Year |
Profit before Partners Remuneration |
- |
Partners Remuneration |
= |
Profit after Partners Remuneration |
|
2016 |
2,00,000 |
- |
90,000 |
= |
1,10,000 |
|
2017 |
2,30,000 |
- |
90,000 |
= |
1,40,000 |
|
2018 |
2,50,000 |
- |
90,000 |
= |
1,60,000 |
|
Year |
Profit |
× |
Weight |
= |
Product |
|
2016 |
1,10,000 |
× |
1 |
= |
1,10,000 |
|
2017 |
1,40,000 |
× |
2 |
= |
2,80,000 |
|
2018 |
1,60,000 |
× |
3 |
= |
4,80,000 |
|
Total |
6 |
|
8,70,000 |
||
Goodwill = Weighted Average Profit × Number of years' Purchase
Goodwill = Rs.1,39,000 ×3 = Rs.4,17,000
Working Notes:
1.
|
|
Calculation Of Normal Profits (31st March Closed) |
|||||
|
Years |
2014 |
2015 |
2016 |
2017 |
2018 |
|
|
Profit /Loss |
70,000 |
1,40,000 |
1,00,000 |
1,60,000 |
1,65,000 |
|
|
Adjustment |
20,000 |
(30,000) |
---- |
(10,000) |
10,000 |
|
|
Normal Profit |
90,000 |
1,10,000 |
1,00,000 |
1,50,000 |
1,75,000 |
|
2.
|
|
Calculation Of Weighted Average Profit (31st March Closed) |
|||||
|
Years |
2014 |
2015 |
2016 |
2017 |
2018 |
|
|
i. Normal Profit |
90,000 |
1,10,000 |
1,00,000 |
1,50,000 |
1,75,000 |
|
|
ii. Adjustment (i ×ii) |
1 |
2 |
3 |
4 |
5 |
|
|
Product |
90,000 |
2,20,000 |
3,00,000 |
6,00,000 |
8,75,000 |
|
Total of weight = 1 + 2 + 3 + 4 + 5 = 15
Total of Product Profit = 90,000 + 2,20,000 + 3,00,000 + 6,00,000 + 8,75,000
= Rs.20,85,000
|
Particulars |
2014-15 |
2015-16 |
2016-17 |
2017-18 |
|
Profits |
1,01,000 |
1,24,000 |
1,00,000 |
1,40,000 |
|
Repair Capitalised |
|
|
+30,000 |
|
|
Depreciation |
|
|
(1,000) |
(2,900) |
|
Overvaluation of Closing Stock |
|
(12,000) |
12,000 |
|
|
Management Cost |
(24,000) |
(24,000) |
(24,000) |
(24,000) |
|
Sale Proceeds |
|
(10,000) |
|
|
|
Adjusted Profits |
77,000 |
78,000 |
1,17,000 |
1,13,100 |
|
Weights |
1 |
2 |
3 |
4 |
|
Product |
77,000 |
1,56,0000 |
3,51,000 |
4,52,400 |
Working Notes:
Note 1: Depreciation on Rs.30,000 machinery is charged for only 4 months in the year 2016-17.
Note 2: Sale proceeds wrongly credited in 2015-16 have been deducted after adjusting for profit of Rs.1,000. No depreciation is charged, since date of sale is not given (assumed that the machinery is sold at the end of the year).
T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 2 - Goodwill: Nature and Valuation Page/Excercise 2.23
|
Year |
Profit before Partners' Remuneration |
_ |
Partners' Remuneration |
= |
Profit after Partners' Remuneration |
|
2016 |
1,70,000 |
- |
1,00,000 |
= |
70,000 |
|
2017 |
2,00,000 |
- |
1,00,000 |
= |
1,00,000 |
|
2018 |
2,30,000 |
- |
1,00,000 |
= |
1,30,000 |
|
Year |
Profit before Partners' Salary |
_ |
Partners' Salary |
= |
Actual Profit after Salary |
|
1 |
60,000 |
- |
24,000 |
= |
36,000 |
|
2 |
72,000 |
- |
24,000 |
= |
48,000 |
|
2 |
84,000 |
- |
24,000 |
= |
60,000 |
T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 2 - Goodwill: Nature and Valuation Page/Excercise 2.24
Average Profit earned by a firm = Rs.1,00,000
Undervaluation of Stock = Rs.40,000
Average Actual Profit
= Average Profit earned by a firm + Undervaluation of Stock
= 1,00,000 + 40,000
= Rs.1,40,000
Super Profit
= Actual Average Profit -Normal Profit
= 1,40,000 -31,500 = Rs.1,08,500
Goodwill
= Super Profit × Number of Times
= 1,08,500 × 5
= Rs.5,42,500
Average Profit earned by a firm = Rs.7,50,000
Overvaluation of Stock = Rs.30,000
Average Actual Profit
= Average Profit earned by a firm - Overvaluation of Stock
= 7,50,000 - 30,000
= Rs.7,20,000
Super Profit = Actual Average Profit - Normal Profit
= 7,20,000 - 6,30,000
=Rs. 90,000
Goodwill = Super Profit × Number of Times
= 90,000 × 3
= Rs.2,70,000
1.
|
|
Calculation Of Normal Profits (31st March) |
|||||
|
Years |
2014 |
2015 |
2016 |
2017 |
2018 |
|
|
Profit /Loss |
1,50,000 |
1,80,000 |
1,00,000 |
2,60,000 |
2,40,000 |
|
|
Adjustment |
--- |
--- |
1,00,000 |
(40,000) |
--- |
|
|
Normal Profit |
1,50,000 |
1,80,000 |
2,00,000 |
2,20,000 |
2,40,000 |
|
Total of Normal Profit = 1,50,000 + 1,80,000 + 2,00,000 + 2,20,000 + 2,40,000
= Rs.9,90,000
2.
Calculation of Capital Employed
Capital employed = Total Assets - Outside liabilities
Capital employed = Rs.20,00,000 - Rs.5,00,000 = Rs.15,00,000
3.
Calculation Super Profit
Super Profit = Average Profit - Normal Profit
Super Profit = 1,98,000 - 1,50,000 = 48,000
Goodwill = Super Profit × Number of Year Purchase
= 48,000 × 3
= Rs.1,44,000
T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 2 - Goodwill: Nature and Valuation Page/Excercise 2.25
Given:
Average Profit - Rs.4,00,00
Normal Rate of Return -10%
(i) Goodwill by Capitalisation of super profit
Capital Employed = Assets -External Liabilities
= 40,00,000 -7,20,000
= Rs.32,80,000
Super Profit =Actual Profit -Normal Profit
= 4,00,000 -3,28,000 = Rs.72,000
= Rs.7,20,000
(ii) Super Profit Method if the goodwill is valued at 3 years purchase of super profits
Therefore, Goodwill is valued at Rs.2,16,000
(i) Calculation of goodwill by capitalization of super profit method
(ii) Calculation of Goodwill by capitalization of average profits method
Working Notes:
Calculation Super Profit
Capital Employed
Capital employed = Total Assets - Outside liabilities
Capital employed = Rs.15,00,000 - Rs.3,00,000 = Rs.12,00,000
Normal Profit
Super Profit
Super Profit = Average Profit - Normal Profit
Super Profit = 2,00,000 - 1,20,000 = 80,000
Working Notes:
Calculation Super Profit
Super Profit = Average Profit - Normal Profit
Super Profit = 50,000 - 30,000 = 20,000
(4) Goodwill = Capitalised Value - Net Asset
Goodwill =8,00,000 - 6,00,000 = 2,00,000
Working Notes:
Calculation Super Profits
Capital employed = Total Assets - Outside liabilities
Capital employed = Rs.7,00,000 - Rs.1,00,000 = Rs.6,00,000
Super Profit = Average Profit (Adjusted) - Normal Profit
Super Profit = Rs.80,000 - Rs.60,000 = Rs.20,000
