Double Entry Book Keeping Ts Grewal 2017 Solutions for Class 12 Commerce Accountancy Chapter 2 Goodwill: Concept And Mode Of Valuation are provided here with simple step-by-step explanations. These solutions for Goodwill: Concept And Mode Of Valuation are extremely popular among Class 12 Commerce students for Accountancy Goodwill: Concept And Mode Of Valuation Solutions come handy for quickly completing your homework and preparing for exams. All questions and answers from the Double Entry Book Keeping Ts Grewal 2017 Book of Class 12 Commerce Accountancy Chapter 2 are provided here for you for free. You will also love the ad-free experience on Meritnation’s Double Entry Book Keeping Ts Grewal 2017 Solutions. All Double Entry Book Keeping Ts Grewal 2017 Solutions for class Class 12 Commerce Accountancy are prepared by experts and are 100% accurate.
Page No 2.29:
Answer:
Number of years’ purchase = 3
Page No 2.29:
Answer:
Calculation of average profits for the last three years
Calculation of average profits for the last four years
Average Profits for last four years is higher than the Average Profits for last three years. Thus, Goodwill of the firm is 2,27,550.
Page No 2.29:
Answer:
Year |
Profit |
2013-14 |
8,00,000 |
2012-13 |
15,00,000 |
2011-12 |
18,00,000 |
2010-11 |
(4,00,000) |
2009-10 |
13,00,000 |
Total Profit |
50,00,000 |
Goodwill = Avg. Profits No. of Years' Purchase
= 10,00,000 3
= Rs 30,00,000
Page No 2.29:
Answer:
Calculation of Average Profit
2012–13 = 1,00,000 – 12,500 = 87,500
2013–14 = 1,25,000 + 25,000 = 1,50,000
2014–15 = 1,12500 – 12,500 = 1,00,000
Total Profits for last three years = 3,37,500
Page No 2.30:
Answer:
Year
|
2009–10
|
2010–11
|
2011–12
|
2012–13
|
2013–14
|
Profit/Loss |
1,50,000
|
3,50,000
|
5,00,000
|
7,00,000
|
(6,00,000)
|
Add: Wrong Debit |
|
|
|
|
1,00,000
|
Less: Depreciation |
|
|
|
|
(25,000)
|
Total
|
1,50,000
|
3,50,000
|
5,00,000
|
7,00,000
|
(5,25,000)
|
Page No 2.30:
Answer:
Goodwill = Normal Average Profit × Number of years' purchase
Year |
Actual Profit |
+ |
Abnormal Loss Non-recurring |
– |
Abnormal Gain Non-recurring |
= |
Normal Profit |
2017 |
30,000 |
+ |
40,000 |
– |
Nil |
= |
70,000 |
2016 |
(80,000) |
+ |
1,10,000 |
– |
Nil |
= |
30,000 |
2015 |
1,10,000 |
+ |
Nil |
– |
30,000 |
= |
80,000 |
Normal Profit for 3 Years |
1,80,000 |
||||||
|
|
Number of years’ purchase is 2
Goodwill = 60,000 × 2 = Rs 1,20,000
Page No 2.30:
Answer:
Year |
Actual Profit |
+ |
Abnormal Loss Non-recurring |
– |
Abnormal Gain Non-recurring |
= |
Normal Profit |
2015 |
50,000 |
+ |
Nil |
– |
5,000 |
= |
45,000 |
2016 |
(20,000) |
+ |
30,000 |
– |
Nil |
= |
10,000 |
2017 |
70,000 |
+ |
Nil |
– |
18,000+8,000 |
= |
44,000 |
Normal Profit for 3 Years |
99,000 |
||||||
|
|
Number of years’ purchase = 2
Page No 2.30:
Answer:
Working Notes:
WN: 1 Calculation of Normal Profits
Year |
Profit/(Loss) (Rs) |
Adjustment |
Normal Profit (Rs) |
31 March, 2014 |
80,000 |
20,000 |
1,00,000 |
31 March, 2015 |
1,45,000 |
(25,000) |
1,20,000 |
31 March, 2016 |
1,60,000 |
(15,000) |
1,45,000 |
31 March, 2017 |
2,00,000 |
|
2,00,000 |
|
5,45,000 |
WN: 2 Calculation of Average Profit
Page No 2.31:
Answer:
Working Notes:
WN: 1 Calculation of Normal Profits
Year |
Profit/(Loss) (Rs) |
Adjustment |
Normal Profit (Rs) |
31 March, 2013 |
(90,000) |
- |
(90,000) |
31 March, 2014 |
1,60,000 |
(50,000) |
1,10,000 |
31 March, 2015 |
1,50,000 |
20,000 |
1,70,000 |
31 March, 2016 |
65,000 |
85,000* |
1,50,000 |
31 March, 2017 |
1,77,000 |
(17,000) |
1,60,000 |
|
5,00,000 |
* Adjustment Amount
Overhauling cost of second hand machinery wrongly accounted as expense instead of capital expenditure. Profit to be increase by Rs 1,00,000 |
1,00,000 |
Depreciation to be debited from P&L A/c |
(15,000) |
Amount to be added back |
85,000 |
WN: 2 Calculation of Average Profit
Page No 2.31:
Answer:
Year |
Profit |
× |
Weight |
= |
Product |
2013 |
20,000 |
× |
1 |
= |
20,000 |
2014 |
24,000 |
× |
2 |
= |
48,000 |
2015 |
30,000 |
× |
3 |
= |
90,000 |
2016 |
25,000 |
× |
4 |
= |
1,00,000 |
2017 |
18,000 |
× |
5 |
= |
90,000 |
Total |
|
|
15 |
|
3,48,000 |
|
|
|
|
|
|
Page No 2.31:
Answer:
Year |
Profit before Partners’ Remuneration |
– |
Partners’ Remuneration |
= |
Profit after Partners’ Remuneration |
2014-15 |
2,00,000 |
– |
90,000 |
= |
1,10,000 |
2015-16 |
2,30,000 |
– |
90,000 |
= |
1,40,000 |
2016-17 |
2,50,000 |
– |
90,000 |
= |
1,60,000 |
Year |
Profit |
× |
Weight |
= |
Product |
2014-15 |
1,10,000 |
× |
1 |
= |
1,10,000 |
2015-16 |
1,40,000 |
× |
2 |
= |
2,80,000 |
2016-17 |
1,60,000 |
× |
3 |
= |
4,80,000 |
|
Total |
|
6 |
|
8,70,000 |
|
|
|
|
|
|
Page No 2.31:
Answer:
Goodwill = Weighted Average Profit × No. of years purchase
Year
|
Profit before Salary
|
Salary
|
Profit after Salary
|
Weights
|
Weighted Profit
|
A
|
B
|
C = A – B
|
D
|
E = C × D | |
2012
|
1,40,000
|
90,000
|
50,000
|
1
|
50,000
|
2013
|
1,01,000
|
90,000
|
11,000
|
2
|
22,000
|
2014
|
1,30,000
|
90,000
|
40,000
|
3
|
1,20,000
|
|
|
|
Total
|
6 |
1,92,000
|
Page No 2.31:
Answer:
Calculation of Normal Profit
Year |
Particulars |
|
Normal Profit |
2005 |
25,000 - 5000 (Management Cost) |
= |
20,000 |
2006 |
27,000 + 10,000 (Plant Repair) – 1,000 (Deprecation) – 1000 (Closing Stock) - 5000 (Management Cost) |
= |
30,000 |
2007 |
46,900 – 900 (Deprecation) +1,000 (Opening Stock) – 2,000 (Closing Stock) – 5,000 (Management Cost) |
= |
40,000 |
2008 |
53,810 – 810 (Deprecation) + 2,000 (Opening Stock) – 5,000 (Management Cost) |
= |
50,000 |
Calculation of Weighted Profit
Year |
Normal Profit |
× |
Weight |
= |
Product |
2005 |
20,000 |
× |
1 |
= |
20,000 |
2006 |
30,000 |
× |
2 |
= |
60,000 |
2007 |
40,000 |
× |
3 |
= |
1,20,000 |
2008 |
50,000 |
× |
4 |
= |
2,00,000 |
|
Total |
|
10 |
|
4,00,000 |
|
|
|
|
|
|
Page No 2.32:
Answer:
Year |
Profit |
× |
Weight |
= |
Product |
2013 |
45,000 |
× |
1 |
= |
45,000 |
2014 |
15,000 |
× |
2 |
= |
30,000 |
2015 |
44,000 |
× |
3 |
= |
1,32,000 |
Total |
6 |
2,07,000 |
|||
Weighted Average Profit
Goodwill = Weighted Average Profit × Number of Years’ Purchase
= 34,500 × 2 = Rs 69,000
Goodwill brought in by Z = Total Goodwill × His share of Profit
Working Note:
Profits for the past years:
Year |
Profit |
Abnormal Profit |
Abnormal Loss |
= |
Profit |
|
2013 |
50,000 |
5,000 |
= |
45,000 |
||
2014 |
(20,000) |
+ |
|
35,000 |
= |
15,000 |
2015 |
70,000 |
- |
26,000* |
= |
44,000 |
|
Total |
|
2,07,000 |
*Total Abnormal Gain = 18,000 (Insurance claim received) + 8,000 (Interest & Dividend received) = 26,000
Page No 2.32:
Answer:
Working Notes:
WN: 1 Calculation of Normal Profits:
Year |
Profit/(Loss) (Rs) |
Adjustment |
Normal Profit (Rs) |
31 March, 2013 |
70,000 |
20,000 |
90,000 |
31 March, 2014 |
1,40,000 |
(30,000) |
1,10,000 |
31 March, 2015 |
1,00,000 |
- |
1,00,000 |
31 March, 2016 |
1,60,000 |
(10,000) |
1,50,000 |
31 March, 2017 |
1,65,000 |
10,000 |
1,75,000 |
WN: 2 Calculations of Weighted Average Profits:
Year |
Normal Profit |
Weight |
Product |
31 March, 2013 |
90,000 |
1 |
90,000 |
31 March, 2014 |
1,10,000 |
2 |
2,20,000 |
31 March, 2015 |
1,00,000 |
3 |
3,00,000 |
31 March, 2016 |
1,50,000 |
4 |
6,00,000 |
31 March, 2017 |
1,75,000 |
5 |
8,75,000 |
Total |
|
15 |
20,85,000 |
Page No 2.32:
Answer:
Working Notes:
WN: 1 Calculation of Normal Profits:
Year |
Profit/(Loss) (Rs) |
Adjustment |
Normal Profit (Rs) |
31 March, 2013 |
1,25,000 |
- |
1,25,000 |
31 March, 2014 |
1,40,000 |
- |
1,40,000 |
31 March, 2015 |
1,20,000 |
- |
1,20,000 |
31 March, 2016 |
55,000 |
1,35,000* |
1,50,000 |
31 March, 2017 |
2,57,000 |
(67,000)** |
1,90,000 |
* Adjustment Amount
(1) Amount spent at the time of purchase of machinery wrongly accounted as expense instead of capital expenditure. Profit to be increase by Rs 1,00,000 |
1,00,000 |
Depreciation to be debited from P&L A/c |
(15,000) |
Amount to be added back |
85,000 |
(2) Closing stock being undervalued on 31st March, 2016 means profit is shown at lower profit. |
** Adjustment Amount
(1) Written down value as on 1st April, 2016 on amount spent |
85,000 |
Depreciation to be debited from P&L A/c |
(17,000) |
Amount to be added back |
68,000 |
(2) Closing stock being undervalued on 31st March, 2016 means profit is shown at lower profit. Profit for next year shown at higher amount as closing stock of previous year is carried forward as opening stock of next year. |
WN: 2 Calculations of Weighted Average Profits:
Year |
Normal Profit |
Weights |
Product |
31 March, 2013 |
1,25,000 |
1 |
1,25,000 |
31 March, 2014 |
1,40,000 |
2 |
2,80,000 |
31 March, 2015 |
1,20,000 |
3 |
3,60,000 |
31 March, 2016 |
1,90,000 |
4 |
7,60,000 |
31 March, 2017 |
1,90,000 |
5 |
9,50,000 |
Total |
|
15 |
24,75,000 |
Page No 2.32:
Answer:
Working Notes:
WN1: Calculation of Future Maintainable Profits
Page No 2.33:
Answer:
Number of years’ purchase = 4
Page No 2.33:
Answer:
Number of years’ purchase = 3
Page No 2.33:
Answer:
Number of years’ purchase = 2
Page No 2.33:
Answer:
Number of years’ purchase = 2
Page No 2.33:
Answer:
Year |
Profit before Partners’ Remuneration |
– |
Partners’ Remuneration |
= |
Actual Profit after Remuneration |
2013–14 |
1,70,000 |
– |
1,00,000 |
= |
70,000 |
2014–15 |
2,00,000 |
– |
1,00,000 |
= |
1,00,000 |
2015–16 |
2,30,000 |
– |
1,00,000 |
= |
1,30,000 |
Number of years’ purchase = 2
Page No 2.33:
Answer:
Page No 2.33:
Answer:
Number of years’ purchase = 4
Page No 2.33:
Answer:
Capital Employed = Total Assets − Creditors
= 75,000 − 5,000 = Rs 70,000
Goodwill of the firm = Rs 24,000
Number of years’ purchase = 4
Or, 24,000 = Super Profit × 4
Page No 2.33:
Answer:
Working Notes:
WN1: Calculation of Future Maintainable Profits
Page No 2.33:
Answer:
Average Profit earned by a firm = Rs 7,50,000
Overvaluation of Stock = Rs 30,000
Average Actual Profit = Average Profit earned by a firm – Overvaluation of Stock
or, Average Actual Profit = 7,50,000 – 30,000 = Rs 7,20,000
Super Profit = Actual Average Profit – Normal Profit
or, Super Profit = 7,20,000 – 6,30,000 = Rs 90,000
Goodwill = Super Profit × Number of Times
Goodwill = 90,000 × 3 = Rs 2,70,000
Page No 2.34:
Answer:
Working Notes:
WN: 1 Calculation of Normal Profits:
Year |
Profit/(Loss) (Rs) |
Adjustment |
Normal Profit (Rs) |
31 March, 2013 |
1,50,000 |
- |
1,50,000 |
31 March, 2014 |
1,80,000 |
- |
1,80,000 |
31 March, 2015 |
1,00,000 |
1,00,000 |
2,00,000 |
31 March, 2016 |
2,60,000 |
(40.000) |
2,20,000 |
31 March, 2017 |
2,40,000 |
- |
2,40,000 |
|
|
Total Profit |
9,90,000 |
WN2: Calculation of Super Profits
WN3: Calculation of Capital Employed
Page No 2.34:
Answer:
Total Capital = Rs 16,00,000
Page No 2.34:
Answer:
Page No 2.34:
Answer:
Capital Employed = Total Tangible Assets – Outside Liabilities
Capital Employed = 28,00,000 – 8,00,000 = Rs 20,00,000
Average Profit = Rs 3,00,000
Super Profit= Average Profit– Normal Profit
Super Profit= 3,00,000 – 2,00,000 = 1,00,000
Page No 2.34:
Answer:
Page No 2.34:
Answer:
Working Notes:
WN1: Calculation of Future Maintainable Profits
Page No 2.34:
Answer:
Working Notes:
WN1: Calculation of Super Profits
WN2: Calculation of Capital Employed
Page No 2.35:
Answer:
(i)
(ii)
Working Notes:
WN1: Calculation of Super Profits
Page No 2.35:
Answer:
WN1: Calculation of Average and Super Profits
Page No 2.35:
Answer:
Average Profit – Rs 4,00,000
Normal Rate of Return – 10%
(i) Goodwill by Capitalisation of Super profit
Super Profit = Actual Profit – Normal Profit
= 4,00,000 – 3,28,000
= Rs 72,000
Goodwill = Rs 7,20,000
(ii) Super Profit Method if the goodwill is valued at 3 years’ purchase of super profits
Therefore, Goodwill is valued at Rs 2,16,000
Page No 2.35:
Answer:
(i) Calculation of goodwill through Capitalisation Method:
Goodwill = 22,50,000 – 15,00,00 = Rs 7,50,000
(ii) Calculation of goodwill through Super Profit Method:
Super Profit = Average Profit – Normal Profit
Super Profit = 4,50,000 – 3,00,000 = Rs 1,50,000
Goodwill = Super Profit × No. of Years’ purchase
Good will = 1,50,000 × 2 = 3,00,000
Page No 2.35:
Answer:
(i) Calculation of Goodwill by Capitalisation of Super Profit Method
Profit of the firm = Rs 5,00,000
(ii) Calculation of Goodwill by Capitalisation of Average Profit Method
Page No 2.35:
Answer:
(i)
(ii)
(iii)
(iv)
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