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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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Explain various methods of valuation of goodwill.
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A business earned an average profit of ₹ 8,00,000 during the last few years. The normal rate of profit in the similar type of business is 10%. The total value of assets and liabilities of the business were ₹ 22,00,000 and ₹ 5,60,000 respectively. Calculate the value of goodwill of the firm by super profit method if it is valued at `2 1/2` years' purchase of super profits.
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Form the following particulars, calculate value of goodwill of a firm by applying Capitalisation of Average Profit Method:
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Rajan and Rajani are partners in a firm. Their capitals were Rajan ₹ 3,00,000; Rajani ₹ 2,00,000. During the year 2018−19, the firm earned a profit of ₹ 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%.
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Find out the value of goodwill at three years purchase of weighted average profit of last four years.
| Year | Profit ₹ |
Weight |
| 2015 | 10,000 | 1 |
| 2016 | 12,000 | 2 |
| 2017 | 16,000 | 3 |
| 2018 | 18,000 | 4 |
Find out the value of goodwill by capitalising super profits:
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- Profits for the last four years are ₹ 30,000, ₹ 40,000, ₹ 50,000 and ₹ 45,000.
- A non-recurring income of ₹ 3,000 is included in the above mentioned profit of ₹ 30,000.
- Average capital employed is ₹ 3,00,000.
What is super profit?
When we use the super profit method for goodwill Valuation:
Goodwill is to be calculated at one and half years’ purchase of average profit of last 5 years. The firm earned profits during 3 years as ₹ 20,000 ₹ 18,000 and ₹ 9,000 and suffered losses of ₹ 2,000 and ₹ 5,000 in the last 2 years. The amount of goodwill will be:
What are the methods of valuation of goodwill?
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.
A business has earned average profits of Rs. 1,00,000 during the last few years and the normal rate of return in a similar business is 10%. Ascertain the value of goodwill by capitalization average profits method, given that the value of net assets of the business is Rs. 8,20,000.
