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प्रश्न
Dinesh and Mahesh are partners sharing profits and losses in the ratio of 3 : 2. They admit Ramesh into partnership for 1/4th share in profits. Ramesh brings in his share of goodwill in cash. Goodwill for this purpose shall be calculated at two years' purchase of the weighted average normal profit of past three years. Weights being assigned to each year 2017−1; 2018−2 and 2019−3. Profits of the last three years were:
2017 − Profit ₹ 50,000 (including profits on sale of assets ₹ 5,000).
2018 − Loss ₹ 20,000 (including loss by fire ₹ 35,000).
2019 − Profit ₹ 70,000 (including insurance claim received ₹ 18,000 and interest on investments and dividend received ₹ 8,000).
Calculate the value of goodwill. Also, calculate the goodwill brought in by Ramesh.
उत्तर
Normal Profits for the year 2017
= ( Total Profits - Profit on Sale of Assets) = Rs. ( 50,000 - 5000 ) = Rs. 45,000.
Normal Profits for the year 2018
= (Loss by Fire - Total Loss) = Rs. (35,000 - 20,000) = Rs. 15,000
Normal Profits for the year 2019
= Rs.(Total Profit - Insurance Claim Received - Dividend Received)
= Rs.(70,000 - 18,000 - 8,000)
=Rs. 44,000
|
Year |
Normal Profits (₹) |
Weights |
Weighted Profits (₹) |
|
2017 |
45,000 |
1 |
45,000 |
|
2018 |
15,000 |
2 |
30,000 |
|
2019 |
44,000 |
3 |
1,32,000 |
|
Total |
6 |
2,07,000 |
|
Weighted Average Profits = `("Total of Weighted Profits"/"Total of Weights")`
= Rs. `([2,07,000]/6)` = Rs. 34,500.
Goodwill = Weighted Average Profits x No. of years of Purchase
= Rs. ( 34,500 x 2 ) = Rs. 69,000
Ramesh's Share of Goodwill = Rs. ( 69,000 x `1/4`) = Rs. 17,250
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Calculate goodwill of a firm on the basis of three years' purchase of the Weighted Average Profit of the last four years. The profits of the last four financial years ended 31st March, were: 2016 − ₹ 25,000; 2017 − ₹ 27,000; 2018 − ₹ 46,900 and 2019 − ₹ 53,810. The weights assigned to each year are: 2016 − 1; 2017 − 2; 2018 − 3; 2019 − 4. You are supplied the following information:
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| Weights | 1 | 2 | 3 | 4 |
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| Liabilities | Amount (₹) |
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|
| Capital A/cs: | Land and Building | 10,00,000 | ||
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| Sundry Creditors | 4,00,000 | Cash at Bank | 1,00,000 | |
| Bills Payable | 1,00,000 | |||
| Outstanding Expenses | 60,000 | |||
| 23,00,000 | | 23,00,000 | ||
Calculate the value of goodwill, if it is valued at three years' purchase of Super Profit.
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(i) Profits of last five consecutive years ending 31st March are: 2019 − ₹ 54,000; 2018 − ₹ 42,000; 2017 − ₹ 39,000; 2016 − ₹ 67,000 and 2015 − ₹ 59,000.
(ii) Capitalisation rate 20%.
(iii) Net assets of the firm ₹ 2,00,000.
Average profit of GS & Co. is ₹ 50,000 per year. Average capital employed in the business is ₹ 3,00,000. If the normal rate of return on capital employed is 10%, calculate goodwill of the firm by:
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(ii) Capitalisation of Super Profit Method.
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:
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(ii) Super Profit Method if the goodwill is valued at 3 years' purchase of super profit.
Assets of the business were ₹ 40,00,000 and its external liabilities ₹ 7,20,000.
Ajeet and Baljeet are partners in a firm. Their capitals are ₹ 9,00,000 and ₹ 6,00,000 respectively. During the year ended 31st March, 2019 the firm earned a profit of ₹ 4,50,000. Assuming that the normal rate of return is 20%, calculate value of goodwill of the firm:
(i) By Capitalisation Method; and
(ii) By Super Profit Method if the goodwill is valued at 2 years' purchase of super profit.
Which of the following is true?
From the following details, calculate the value of goodwill at 2 years purchase of super profit:
- Total assets of a firm are ₹ 5,00,000
- The liabilities of the firm are ₹ 2,00,000
- Normal rate of return in this class of business is 12.5%.
- Average profit of the firm is ₹ 60,000.
From the following information, calculate the value of goodwill under the annuity method:
| Particulars | ₹ |
| Average profit | 14,000 |
| Normal Profit | 4,000 |
| Normal rate of return | 15% |
| Years of purchase of goodwill | 5 |
Present value of ₹ 1 for 5 years at 15% per annum as per the annuity table is 3.352
How is the value of goodwill calculated under the capitalisation method?
The following steps are of which method of goodwill:
- Calculate the average profit.
- Calculate the normal profit on the capital employed on the basis of the normal rate of return.
- Calculate the super-profits by deducting normal profit from the average profits, and
- Calculate goodwill by multiplying the super-profits by the given number of years' purchase.
Under this method, the value of goodwill is ascertained by deducting the actual capital employed (net assets) in the business from the capitalized value of the average profits on the basis of the normal rate of return.
