Page No 3.35:
Question 41:
A firm earns profit
of ` 5,00,000. Normal Rate of
Return in a similar type of business is 10%. The value of total assets
(excluding goodwill) and total outsiders' liabilities as on the date of
goodwill are ` 55,00,000 and ` 14,00,000 respectively. Calculate value of goodwill
according to Capitalisation of Super Profit Method as
well as Capitalisation of Average Profit Method.
Answer:
(i)Calculation
of Goodwill by Capitalisation of Super Profit Method
|
goodwill |
=super profit ×100/ normal rate of return |
|
Capital
employed |
= assets – external liabilities =55,00,000-14,00,000 |
|
Normal
profit |
= Capital employed×Normal rate of
return/100 =41,00,000×10/100 = 41,00,000 |
Profit of the firm = ` 5,00,000
|
Super Profit |
= Actual Profit – Normal Profit =90,000 |
|
Goodwill |
=90,000×100/10 = ` 9,00,000 |
(ii) Calculation of
Goodwill by Capitalisation of Average Profit Method
|
goodwill |
= Capitaled Value of
Profit – Actual capital employed |
|
Capitalised value of profit |
= actual profit×100/normal
rate of return = 5,00,000×100/10 = 50,00,000 |
|
Capital employed |
= Assets- external liabilities = 55,00,000-14,00,000 = 41,00,000 |
|
Goodwill |
= 50,00,000-41,00,000 = 9,00,000 |
Page No 3.35:
Question 42:
On 1st April, 2018,
a firm had assets of
` 1,00,000 excluding stock of ` 20,000. The current
liabilities were
` 10,000 and the balance constituted Partners' Capital Accounts.
If the normal rate of return is 8%, the Goodwill of the firm is valued of `
60,000 at four years' purchase of super profit, find the actual profits of the
firm.
Answer:
Total Assets of the firm=(Sundry Assets + Stock)= `(1,00,000+20,000)= `1,20,000
Current Liabilities of the firm= `10,000
Capital Employed=(Total Assets - Current Liabilities)= `(1,20,000 - 10,000)= `1,10,000
Normal Profits=Capital Employed
× Normal Rate of Return/100= `1,10,000×8/100= `8,800
Goodwill = Super Profits × No. of years of purchase
60,000= Super Profits × 4
Super Profits= `60,000/4= `15,000
Super Profits= Average Actual Profits - Normal Profits
15,000=Average Actual Profits - 8,800
Average Actual Profits= `(15,000+8,800)= `23,800
Page No 3.35:
Question 43:
Average profit of
the firm is ` 2,00,000. Total assets of the
firm are ` 15,00,000 whereas Partners'
Capital is ` 12,00,000. If normal rate
of return in a similar business is 10% of the capital employed, what is the
value of goodwill by Capitalisation of Super Profit?
Answer:
|
Goodwill |
=Super Profit
× 100Normal Rate of Return =80,000×100/10 = ` 8,00,000 |
Working Notes:
WN1: Calculation of Super Profit
Average Profit=Total Profit for past given years/Number of Years
= ` 2,00,000
Normal Profit = Capital Employed × Normal Rate of Return/100
=12,00,000×10/100=
` 1,20,000
Super Profit=Average Profit-Normal Profit
=2,00,000-1,20,000=
` 80,000
WN2: Calculation of Capital Employed
Capital Employed=Total Assets-Outside Liabilities
=15,00,000-3,00,000=
` 12,00,000
Page No 3.35:
Question 44:
Rajan and Rajani
are partners in a firm. Their capitals were Rajan `
3,00,000; Rajani ` 2,00,000. During the year 2018−19, the firm
earned a profit of ` 1,50,000. Calculate the value
of goodwill of the firm by capitalisation of super
profit assuming that the normal rate of return is 20%.
Answer:
Goodwill=Super Profits×100Nominal Rate of ReturnSuper Profits=Average Profit-Normal ProfitAverage Profit= `1,50,000 (Given)Normal Profit=Capital Employed×Normal Rate of ReturnNormal Profit=(3,00,000+2,00,000)×20%= `1,00,000Super Profit=1,50,000-1,00,000= `50,000Goodwill=50,000×10020= ` 2,50,000
Page No 3.35:
Question 45:
Average profit of
GS & Co. is ` 50,000 per year. Average
capital employed in the business is `
3,00,000. If the normal rate of return on capital employed is 10%, calculate
goodwill of the firm by:
(i) Super Profit Method at three years' purchase; and
(ii) Capitalisation of Super Profit Method.
Answer:
|
(i) Goodwill |
=Super Profit×No. of Years' Purchase
=20,000×3= ` 60,000
|
|
(ii) Goodwill |
=Super Profit×100/Normal Rate of Return
=20,000×100/10
= ` 2,00,000
|
Working Notes:
WN1: Calculation of
Super Profits
Average Profit=Total Profits for past given years/No. of Years
=
` 50,000
Normal Profit=Capital Employed×Normal Rate of Return/100
=3,00,000×10/100= ` 30,000
Super Profit=Average Profit-Normal Profit
=50,000-30,000=
` 20,000
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