Question 26:
From the following
information, calculate value of goodwill of the firm by applying Capitalisation Method: Total Capital of the firm `16,00,000.
Normal rate of return 10%. Profit for the year `
2,00,000.
Answer:
Goodwill= Capitalised value – Actual capital
Capitalised value of goodwill= profit ×100/ Normal rate of return
Capitalised value of goodwill= 2,00,000×100/ 10=20,00,000
Total Capital = ` 16,00,000
Goodwill = 20,00,000-16,00,000 =4,00,000
Question 27:
A firm earns average profit of ` 3,00,000 during the last few years. The Normal Rate of Return of the industry is 15%. The assets of the business were ` 17,00,000 and its liabilities were ` 2,00,000.
Calculate the goodwill of the firm by Capitalisation of Average Profit Method.
Answer:
Calculation of Goodwill by Capitalisation
of Average Profit Method
|
Goodwill |
= Capitalised
Value of Profit – Actual capital employed |
|
Capitalised value of profit |
= Actual profit×100/normal rate of return = 3,00,000×100/15 = 20,00,000 |
|
Capital employed |
= Assets- external liabilities = 30,00,000-15,00,000 = 15,00,000 |
|
Goodwill |
= 20,00,000-15,00,000 = 5,00,000 |
Question 28: A and B were partners in a firm with capitals of `3,00,000 and `2,00,000 respectively. The normal rate of return was 20% and the capitalised value of average profits was `7,50,000. Calculate goodwill of the firm by capitalisation of average profits method. (CBSE 2020 C)
Answer:
Total Actual Capital Employed by A and B is `3,00,000 + `2,00,000= `5,00,000
capitalised value of average profits = `7,50,000
|
Goodwill |
= |
Capitalised Value – Capital
Employed |
|
|
= |
7,50,000 - 5,00,000 |
|
Goodwill |
= |
2,50,000 |
Question 29: Puneet and Tarun are in restaurant business having credit balances in
their fixed Capital Accounts as `2,50,000 each. They have credit balances in their Current
Accounts of `30,000 and `20,000 respectively. The firm does not have any liability. They are
regularly earning profits and their average profit of last 5 years is `1,00,000. if the normal
rate of return is 10%, find the value of goodwill by Capitalisation
of Average Profit Method.
Answer:
Total Actual Capital Employed = 2,50,000+2,50,000+30,000+20,000
=5,50,000
Capitalised Value of Average profit= Average Profit×100/Rate of Return
= 1,00,000×100/10
=10,00,000
|
Goodwill |
= |
Capitalised Value – Capital
Employed |
|
|
= |
10,00,000 - 5,50,000 |
|
Goodwill |
= |
4,50,000 |
Question
30:
Form the following particulars, calculate value of goodwill
of a firm by applying Capitalisation of Average
Profit Method:
(i) Profits of last five consecutive years ending
31st March are: 2022 − `54,000; 2021 − `42,000; 2020 − `39,000; 2019 − `67,000 and 2018
− `59,000.
(ii) Capitalisation rate 20%.
(iii) Net assets of the firm ` 2,00,000.
Answer:
|
Goodwill Average profit |
= Capitalised value – Actual capital
=Average profit = total
profit of past given years÷number of years
=54,000+42,000+39,000+67,000+59,000÷5 =52,200 |
|
Capitalised value of goodwill |
= Average profit ×100÷Normal
rate of return =52,200 ×100÷20 =2,61,000 |
|
Goodwill |
= Capitalised value – Actual capital
=2,61,000-2,00,000 =61,000 |