Goodwill is to be valued at three years’ purchase of four years’ average profit. Normal Business Profits of the firm for last four years ending 31st March, were: 2022: ₹12,000; 2023: ₹18,000; 2024:  ₹16,000; 2025: ₹14,000. Calculate amount of Goodwill. Answer : Back

Profits for the five years ending 31st March, are as follows: Year 2021: ₹4,00,000; Year 2022: ₹3,98,000; Year 2023: ₹4,50,000; Year 2024:  ₹4,45,000 and Year 2025: ₹5,00,000. Calculate goodwill of the firm on the basis of 4 years’ purchase of 5 years’ average profit. (NCERT, Modified) Answer : Back

Purav and Purvi are partners in a firm sharing profits and losses in the ratio of 2:1. They admit Parv into partnership for 1/4th share on 1st April, 2025. For this purpose, goodwill is to be valued at four times the average annual profit of the previous four or five...

Asin and Shreyas were partners sharing profits and losses in the ratio of 2:1. They admitted Shyam as a partner for 1/5th share in profits. For this purpose, Goodwill of the firm was to be valued on the basis of three years’ purchase of last five years’ average profit. Profits...

Tarang purchased Jyoti’s business with effect from 1st April, 2025. Profits shown by Jyoti’s business for the last three financial years ended 31st March, were: 2023 1,00,000 (including an abnormal gain of 12,500). 2024 1,25,000 (after charging an abnormal loss of 25,000). 2025 1,12,500 (excluding 12,500 as insurance premium on...

Abhay, Babu and Charu are partners sharing profits and losses equally. They agree to admit Daman for equal share of profit. For this purpose, value of goodwill is to be calculated on the basis of four years’ purchase of average profit of last five years. These profits for the year...

Sumit purchased Amit’s business on 1st April, 2025. Goodwill was decided to be valued at two years purchase of average normal profit of last four years. The profits for the past four years were: Year Ended 31st March, 2022 31st March, 2023 31st March, 2024 31st March, 2025 Profits (₹)...

Profits of a firm for the year ended 31st March for the last five years were: Year Ended 31st March, 2021 31st March, 2022 31st March, 2023 31st March, 2024 31st March, 2025 Profits (₹) 20,000 24,000 30,000 25,000 18,000 Calculate value of goodwill on the basis of three years’...

Raman and Daman are partners sharing profits in the ratio of 60:40 and for the last four years they have been getting annual salaries of ₹50,000 and ₹40,000 respectively. The annual accounts have shown the following net profit before charging partners’ salaries: Year ended 31st March, 2023: ₹1,40,000; 2024:  ₹1,01,000...

The capital of the firm of Anuj and Benu is ₹10,00,000 and the market rate of interest is 15%. Annual salary to the partners is ₹60,000 each. Profits for the last three years were ₹3,00,000, ₹3,60,000 and ₹4,20,000. Goodwill of the firm is to be valued on the basis of...

Atul and Bipul had a firm in which they had invested ₹50,000. On an average, the profits were ₹16,000. The normal rate of return in the industry is 15%. Goodwill is to be valued at four years’ purchase of profits in excess of profits @15% on the money invested. Calculate...

Sakshi and Megha were partners sharing profits and losses in the ratio of 3:1. Capital employed as on 31st March, 2024 was ₹14,00,000. Profit earned on an average is ₹1,80,000. Calculate goodwill of the firm on the basis of 5 years’ purchase of Super Profits, if the normal rate of...

A and B were partners in a firm sharing profits equally. Their capitals were: A: ₹1,20,000 and B: ₹80,000. The annual rate of interest is 20%., Profits of the firm for the last three years were ₹34,000; ₹38,000 and ₹30,000. They admitted C as a new partner. On C’s admission...

Average net profit expected in future by XYZ firm is ₹36,000 per year. Average capital employed in the business by the firm is ₹2,00,000. The normal rate of return from capital invested in this class of business is 10%. Remuneration of the partners is estimated to be ₹6,000 p.a. Calculate...

A partnership firm earned net profits during the last three years ended 31st March, as follows: 2023: ₹17,000; 2024: ₹20,000; 2025: ₹23,000. Capital investment in the firm throughout the above-mentioned period has been ₹80,000. Having regard to the risk involved, 15% is considered to be a fair return on the...

Amit and Kartik are partners sharing profits and losses equally. They decided to admit Saurabh for an equal share in the profits. For this purpose, the goodwill of the firm was to be valued at four years’ purchase of super profits. The Balance Sheet of the firm on Saurabh’s admission...

On 1st April, 2025, an existing firm had assets of ₹75,000 including cash of ₹5,000. Its creditors amounted to ₹5,000 on that date. The firm had a Reserve of ₹10,000 while Partners’ Capital Accounts showed a balance of ₹60,000. If Normal Rate of Return is 20% and goodwill of the...

On 1st April, 2023, a partnership firm had assets of ₹2,00,000 including cash of ₹6,000 and bank balance of ₹14,000. The partners’ capital accounts showed a balance of ₹1,90,000 and reserves constituted the rest. If the normal rate of return is 10% and the goodwill of the firm is valued...

Average profit of a firm during the last few years is ₹2,00,000 and the normal rate of return in a similar business is 10%. If the goodwill of the firm is ₹2,50,000 at 4 years’ purchase of super profit, find the capital employed by the firm.  Answer : Back

A business earned an average profit of ₹1,80,000 during the last few years. Average capital employed by the firm is ₹12,50,000. If goodwill of the firm is valued at ₹1,60,000 at 2 years’ purchase of super profit, find normal rate of return.  Answer : Back

A business has earned average profit of ₹1,20,000 during the last four years and the normal rate of return in similar business is 15%. If goodwill of the firm is valued at ₹1,35,000 at 3 years’ purchase of average super profit, find the capital employed of the firm.  Answer :...

Average profit earned by a firm is ₹1,00,000 which includes under valuation of stock of ₹40,000 on an average basis. The capital invested in the business is ₹6,30,000 and the normal rate of return is 5%. Calculate goodwill of the firm on the basis of 5 times the super profit. ...

Average profit earned by a firm is ₹7,50,000 which includes overvaluation of stock of ₹30,000 on an average basis. The capital invested in the business is ₹42,00,000 and the normal rate of return is 15%. Calculate goodwill of the firm on the basis of 3 times the super profit. Answer...

Akshay and Amit are partners in a firm and they admit Jaspal into partnership w.e.f. 1st April, 2025. They agreed to value goodwill at 3 years’ purchase of Super Profit Method for which they decided to average profit of last 5 years. The profits for the last 5 years were:...

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 : Back

A firm earned 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. Answer : Back

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) Answer : Back

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...

From the following particulars, calculate value of goodwill of a firm by Capitalisation of Average Profit Method: (i) Profits of last five consecutive years ending 31st March, are: 2025: ₹54,000; 2024: ₹42,000; 2023: ₹39,000; 2022: ₹67,000 and 2021: ₹59,000. (ii) Capitalisation rate 20%. (iii) Net assets of the firm ₹2,00,000....

A business has earned average profit of ₹4,00,000 during the last few years and the normal rate of return in similar business is 10%. Find value of goodwill by: (i) Capitalisation of Super Profit Method, and (ii) Super Profit Method if the goodwill is valued at 3 years’ purchase of...

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...

On 1st April, 2018, a firm had assets of ₹1,00,000 excluding stock of ₹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...