Goodwill In Partnership Accounts Book Back Questions

12th Standard EM

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Accountancy

Time : 00:45:00 Hrs
Total Marks : 30
    5 x 1 = 5
  1. Which of the following statements is true?

    (a)

    Goodwill is an intangible asset

    (b)

    Goodwill is a current asset

    (c)

    Goodwill is a fictitious asset

    (d)

    Goodwill cannot be acquired

  2. The average rate of return of similar concerns is considered as

    (a)

    Average profit

    (b)

    Normal rate of return

    (c)

    Expected rate of return

    (d)

    None of these

  3. When the average profit is Rs.25,000 and the normal profit is Rs.15,000, super profit is

    (a)

    Rs.25,000

    (b)

    Rs.5,000

    (c)

    Rs.10,000

    (d)

    Rs.15,000

  4. Book profit of 2017 is Rs.35,000; non-recurring income included in the profit is Rs.1,000 and abnormal loss charged in the year 2017 was Rs.2,000, then the adjusted profit is

    (a)

    Rs.36,000

    (b)

    Rs.35,000

    (c)

    Rs.38,000

    (d)

    Rs.34,000

  5. The total capitalised value of a business is Rs.1,00,000; assets are Rs.1,50,000 and liabilities are Rs.80,000. The value of goodwill as per the capitalisation method will be

    (a)

    Rs.40,000

    (b)

    Rs.70,000

    (c)

    Rs.1,00,000

    (d)

    Rs.30,000

  6. 3 x 2 = 6
  7. A partnership firm has decided to value its goodwill for the purpose of settling a retiring partner. The profits of that firm for the last four years were as follows:
    2015: Rs.40,000; 2016: Rs.50,000; 2017: Rs.48,000 and 2018: Rs.46,000
    The business was looked after by a partner. No remuneration was paid to him. The fair remuneration of the partner valued at comes to Rs.6,000 per annum.
    Find out the value of goodwill, if it is valued on the basis of three years purchase of the average profits of the last four years

  8. The following are the profits of a firm in the last five years:
    2014: Rs.10,000; 2015: Rs.11,000; 2016: Rs.12,000; 2017: Rs.13,000 and 2018: Rs.14,000
    Calculate the value of goodwill at 2 years purchase of average profit of five years.

  9. What is goodwill?

  10. 3 x 3 = 9
  11. The following are the profits of a firm in the last five years:
    2014: Rs.4,000; 2015: Rs.3,000; 2016: Rs.5,000; 2017: Rs.4,500 and 2018: Rs.3,500
    Calculate the value of goodwill at 3 years purchase of average profits of five years.

  12. The following particulars are available in respect of a business carried on by a partnership firm:
    (a) Profits earned: 2016: Rs.30,000; 2017: Rs.29,000 and 2018: Rs.32,000.
    (b) Profit of 2016 includes a non-recurring income of Rs.3,000.
    (c) Profit of 2017 is reduced by Rs.2,000 due to stock destroyed by fire.
    (d) The stock is not insured. But, it is decided to insure the stock in future. The insurance premium is estimated at Rs.5,600 per annum.
    You are required to calculate the value of goodwill on the basis of 2 years purchase of average profits of the last three years.

  13. Calculate the value of goodwill at 5 years purchase of super profit from the following information:
    (a) Capital employed: Rs.1,20,000
    (b) Normal rate of profit: 20%
    (c) Net profit for 5 years:
    2014: Rs.30,000; 2015: Rs.32,000; 2016: Rs.35,000; 2017: Rs.37,000 and 2018: Rs.40,000
    (d) Fair remuneration to the partners Rs.2,800 per annum.

  14. 2 x 5 = 10
  15. From the following information, compute the value of goodwill as per annuity method:
    (a) Capital employed: Rs.50,000
    (b) Normal rate of return: 10%
    (c) Profits of the years 2016, 2017 and 2018 were Rs.13,000, Rs.15,000 and Rs.17,000 respectively.
    (d) The present value of annuity of Rs.1 for 3 years at 10% is Rs.2.4868.

  16. A partnership firm earned net profits during the last three years as follows:
    2016 : Rs.20,000; 2017 : Rs.17,000 and 2018 : Rs.23,000
    The capital investment of the firm throughout the above mentioned period has been Rs.80,000. Having regard to the risk involved, 15% is considered to be a fair return on capital employed
    in the business. Calculate the value of goodwill on the basis of 2 years purchase of super profit.

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