Which of the following statements is true?

Super profit is the difference between

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

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

Goodwill helps in earning more profit and attracts more _________

Which of the following method, goodwill is calculated by multiplying the weighted average profit?

Self- generated goodwill should not be shown in the ______________

Assertion (A): Goodwill is the good name or reputation of the business which brings benefit to the business.
Reason (R): It is an intangible asset as it has no physical existence.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true

(i) Goodwill is shown under fixed assets in the balance sheet.
(ii) Goodwill is an intangible asset.
(iii) Goodwill helps in earning more profit and attracts more customers.
(a) (i) is correct
(b) (ii) is correct
(c) (i) and (ii) are correct
(d) (i), (ii) and (iii) are correct

(i) Goodwill acquired by making payment in cash or kind is called acquired or purchased goodwill.
(ii) Weighted average profit method, goodwill is calculated by multiplying the weighted average profit by a certain number of years of purchase.
(iii) Normal profit = Capital employed x Fixed assets
(a) (i) is correct
(b) (i) and (ii) are correct
(c) (ii) and (iii) are correct
(d) (i), (ii) and (iii) are correct

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

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.

What is goodwill?

What is super profit?

State any two circumstances under which goodwill of a partnership firm is valued.

What is Annuity?

From the following information relating to Arul enterprises, calculate the value of goodwill on the basis of 2 years purchase of the average profits of 3 years.
(a) Profits for the years ending 31^st December 2016, 2017 and 2018 were Rs. 46,000, Rs. 44,000 and Rs. 50,000 respectively.
(b) A non-recurring income of Rs. 5,000 is included in the profits of the year 2016.
(c) The closing stock of the year 2017 was overvalued by Rs. 10,000.

For the purpose of admitting a new partner, a firm has decided to value its goodwill at 3 years purchase of the average profit of the last 4 years using weighted average method. Profits of the past 4 years and the respective weights are as follows:

Compute the value of goodwill.

From the following information relating to a partnership firm, find out the value of its goodwill based on 3 years purchase of average profits of the last 4 years:
(a) Profits of the years 2015, 2016, 2017 and 2018 are Rs. 10,000, Rs. 12,500, Rs. 12,000 and Rs. 11,500 respectively.
(b) The business was looked after by a partner and his fair remuneration amounts to Rs. 1,500 per year. This amount was not considered in the calculation of the above profits.

How is the value of goodwill calculated under the capitalisation method?

From the following details, calculate the value of goodwill at 2 years purchase of super profit:
(a) Total assets of a firm are Rs. 5,00,000
(b) The liabilities of the firm are Rs. 2,00,000
(c) Normal rate of return in this class of business is 12.5 %.
(d) Average profit of the firm is Rs. 60,000

From the following information, calculate the value of goodwill under annuity method:

Present value of Rs. 1 for 5 years at 15% per annum as per the annuity table is 3.352.

From the following information, find out the value of goodwill by capitalisation method:
(i) Average profit Rs. 20,000
(ii) Normal rate of return 10%
(iii) Capital employed Rs. 1,50,000