Related InterviewSolutions

• (Super Profit Method, Undervaluation of Stock). Average profit earned by a firm is Rs. 75,000 which includes undervaluation of stock of Rs. 5,000 on average basis. The capital invested in the business is Rs. 7,00,000 and the normal rate of return is `7%`. Calculate goodwill of the firm on the basis of 5 times the super profit.
• Rajan and Rajani ar partners in a firm. Their capitals were Rajan Rs. 3,00,000, Rajani Rs. 2,00,000. During the year 2018 - 2019, the firm earned a profit of Rs. 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%`.
• Vipin agreed to purchase Abhishek’s business. The profits disclosed by Abhishek’s business for last four years were as follows: 2010: Rs. 50,000(including an abnormal gain of Rs. 10,000) 2011: Rs.55,000 (including an income from investments outside the business worth Rs. 5,000) 2012: Rs. 45,000 (after charging an abnormal loss of Rs. 5000) 2013: Rs. 66,000 (excluding Rs. 6,000 as insurance premium on firm’s property – now to be insured) Calculate the value of firm’s goodwill on the basis of three years’ purchase of Average Profits of last four years.
• The capital employed as shown by the books of ABC Ltd is Rs.5,00,000 and the normal rate of return is 10 %. Goodwill is to be calculated on the basis of 3 years’ purchase of super profits of the last four years. Profits for the last four years are:YearProfit2010 Rs.1,00,0002011Rs.1,22,500 2012Rs.74,5002013Rs.54,000
• ABC Ltd earns Rs.40,000 as its average profits. The normal rate of return is 10%. Total assets of the firm are Rs.10,00,000 and its total external liabilities are Rs.5,00,000. Calculate the amount of goodwill:
• State whether the following statements are True or False:1. The new ratio of existing partners is calculated by dividing remaining share of the profit in their old profit sharing ratio. 2. No partner can be admitted into partnership firm without the consent of all other partners. 3. When only the share of the new partner is given, then it is assumed that the remaining profit would be shared by the old partners in their old profit sharing ratio.
• State whether the following statements are True or False: 1. The ratio in which partners surrender their profits is known as new profit sharing ratio. 2. Sacrificing ratio is calculated by deducting new profit sharing ratio from existing profit sharing ratio.
• State whether the following statements are True or False:1. Joint Life policy is the insurance policy covering the lives of partners jointly. 2. Surrender value of the Joint Life Policy is the realizable value of policy on the death of a partner. 3. Goodwill is an intangible asset. 4. For goodwill valuation, normal business profits of existing business is considered
• State whether the following statements are True or False:1. For the purpose of goodwill valuation, normal business profit means profits as assessed by income tax officer. 2. Goodwill exists continually with existence of successful business and identified on transfer of ownership in business. 3. Precise value of goodwill is known only when business is sold as whole by negotiation. 4. Normal business profits for goodwill valuation are otherwise of non-trading incomes and expenses.
• Fill in the Blanks:When new partner bring his share of goodwill in cash form in the firm then it is taken by old partner in their _______ratio.