###### Please wait...
Contact Us
Contact
Need assistance? Contact us on below numbers

For Enquiry

10:00 AM to 7:00 PM IST all days.

Business Inquiry (North)

Business Inquiry (West / East / South)

OR

or

Thanks, You will receive a call shortly.
Customer Support

You are very important to us

For any content/service related issues please contact on this number

022-62211530

Mon to Sat - 10 AM to 7 PM

# T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 2 - Goodwill: Nature and Valuation

Share this:
Exercise/Page

Solution Ex. 1

Solution Ex. 2

Solution Ex. 3

## T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 2 - Goodwill: Nature and Valuation Page/Excercise 2.21

Solution Ex. 4

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

Solution Ex. 5

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

Solution Ex. 6

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

Solution Ex. 7

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

Solution Ex.8

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

Solution Ex.9

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.

Solution Ex. 10

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

Solution Ex. 11

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

Solution Ex. 12

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

Solution Ex. 13

 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

Solution Ex. 14

Solution Ex. 15

Solution Ex. 16

Solution Ex. 17

Solution Ex. 18

 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

Solution Ex. 19

Solution Ex. 20

 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

Solution Ex. 21

Solution Ex. 22

Solution Ex. 23

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

Solution Ex. 24

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

Solution Ex.25

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

Solution Ex. 26

Solution Ex.27

Solution Ex. 28

## T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 2 - Goodwill: Nature and Valuation Page/Excercise 2.25

Solution Ex. 29

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

Solution Ex.30

(i) Calculation of goodwill by capitalization of super profit method

(ii) Calculation of Goodwill by capitalization of average profits method

Solution Ex.31

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

Solution Ex.32

Solution Ex.33

Working Notes:

Calculation Super Profit

Super Profit = Average Profit - Normal Profit

Super Profit = 50,000 - 30,000 = 20,000

Solution Ex.34

(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

# Text Book Solutions

CBSE XII Commerce - Accountancy

## This content is available for subscribed users only.

OR

Call us

1800-212-7858 (Toll Free) to speak to our academic expert.
OR

Let us get in touch with you