CBSE 2025, Set 1

Question

The capital of the firm of Rajat and Karan is ₹ 15,00,000 and the market rate of interest is 12%. Annual salary of Rajat and Karan is ₹ 20,000 and ₹ 30,000 respectively. The profits for the last three years were ₹ 2,40,000, ₹ 2,80,000 and ₹ 3,20,000.

Goodwill of the firm is to be valued on the basis of two years purchase of last three years' average super profits. Calculate the goodwill of the firm.

Edvaya · Accepted Answer

The correct answer is Subjective. **Calculation of Goodwill:** 1. Normal profit = (Normal Rate of return / 100) × Capital Employed = (12 / 100) × 15,00,000 = ₹ 1,80,000. 2. Average profit = (2,40,000 + 2,80,000 + 3,20,000) / 3 = ₹ 2,80,000. 3. Average profit less partners' salary = 2,80,000 - (20,000 + 30,000) = 2,80,000 - 50,000 = ₹ 2,30,000. 4. Super profit = Average profit - Normal profit = 2,30,000 - 1,80,000 = ₹ 50,000. 5. Goodwill = Super profit × Number of years' purchase = 50,000 × 2 = **₹ 1,00,000**. *(Alternate method acceptable: Add partners salary to Normal Profit. Normal Profit = 1,80,000 + 50,000 = 2,30,000. Super profit = 2,80,000 - 2,30,000 = 50,000).*

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Accountancy > Accounting For Partnership Firms > Goodwill Nature And Valuation

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