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Total of Assets side of the Balance Sheet – ₹ 25,00,000, Debit Balances in Current Account of Naresh and Vikesh – ₹ 75,000 and ₹ 25,000 respectively; Bank Loan ₹ 8,00,000; Goodwill ₹ 1,00,000; Trade Investments – ₹ 25,000; Profit and Loss Accounts (Debit) – ₹ 15,000.

Ans – d) Explanation:- Capital Employed = Total Assets – Goodwill – Profit and Loss Account (Dr) Balance – Bank Loan – Debit balances of partner’s Current Account Capital Employed = ₹ 25,00,000 – ₹ 1,00,000 – ₹ 15,000 –…

Capital Accounts of Partners Naresh and Vikesh – ₹ 5,00,000 each; Balances in Current Accounts of Naresh and Vikesh – ₹ 50,000 and ₹ 40,000 respectively; Bank Loan – ₹ 10,00,000; Goodwill ₹ 50,000; Investments – ₹ 25,000; Advertisement Suspense – ₹ 15,000. Based on the above information, Capital Employed for the purposes of the valuation of Goodwill will be

Ans – c) Explanation:- Capital Employed = Partner’s Capital + Partner’s Current account Balances – Goodwill – Investments – Advertisement Suspense Capital Employed = 5,00,000 + 5,00,000 + 50,000 + 40,000 – 50,000 – 25,000 – 15,000 Capital Employed =…

The average Profit of the firm is ₹ 6,00,000. Total tangible Assets in the firm are ₹ 28,00,000 and Outside Liabilities are ₹ 8,00,000. In the same type of business, the normal rate of return is 20% of the capital employed. Calculate the value of goodwill by Capitalisation of the Super Profit Method.

Ans – a) Explanation:- Capital Employed = Tangible Assets – Outside Liabilities Capital Employed = 28,00,000 – 8,00,000 Capital Employed = ₹ 20,00,000 Normal Profit = Capital Employed × Normal Rate of Return Normal Profit = 20,00,000 × 20% Normal…

Jagat and Kamal are partners in a firm. Their Capitals are Jagat ₹ 3,00,000 and Kamal ₹ 2,00,000. During the year ended 31st March 2023, the firm earned a profit of ₹ 1,50,000. The normal rate of return is 20%. Calculate the value of the Goodwill of the Firm by  Capitalisation Method.

Ans – d) Explanation:- Capital Employed = Jagat’s Capital + Kamal’s Capital Capital Employed = ₹ 3,00,000 + ₹ 2,00,000 Capital Employed = ₹ 5,00,000 Capitalised Value of Average Profit = Average Profit/Normal Rate of Return Capitalised Value of Average…

A firm earned ₹ 60,000 as profit, the normal rate of return being 10%. Assets of the firm are ₹ 7,20,000 (excluding goodwill) and Liabilities are ₹ 2,40,000. Find the value of Goodwill by Capitalisation of the Average Profit Method.

Ans – c) Solution:- Capital Employed = Assets (excluding goodwill) – Liabilities Capital Employed = ₹ 7,20,000 – 2,40,000 Capital Employed = ₹ 4,80,000 Capitalised Value of Average Profit = Average Profit/Normal Rate of Return Capitalised Value of Average Profit…

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