Amol and Ameet are partners sharing profits and losses in the ratio of 2 : 1. They admit Atul for 1/4th share. For the purpose of admission of Atul, goodwill of the firm is to be valued on the basis of 2 year purchase of Average Super Profit of last four years. The normal rate of return in their business is 12% on capital employed.
Amol and Ameet are partners sharing profits and losses in the ratio of 2 : 1. They admit Atul for 1/4th share. For the purpose of admission of Atul, goodwill of the firm is to be valued on the basis of 2 year purchase of Average Super Profit of last four years. The normal rate of return in their business is 12% on capital employed.
Balance Sheet of the firm gives following details:
- Fixed Assets – ₹ 2,10,000
- Current Assets – ₹ 1,40,000
- Current Liabilities = ₹ 35,000
Profits of last 4 years ending on 31st March, are:
| 2020 (₹) | 2021 (₹) | 2022 (₹) | 2023 (₹) |
| 1,10,000 | 1,00,000 | 98,000 | 1,24,000 |
I. Value of goodwill of the firm on Atul’s admission was
a) ₹ 70,200
b) ₹ 1,05,200
c) ₹ 1,40,400
d) ₹ 1,08,000
II. Atul brings 60% of his share of goodwill. The account to be debited to record his compensation will be
a) Premium for Goodwill A/c ₹ 21,060
b) Atul’s Current A/c ₹ 14,040
c) Both a) and b)
d) Premium for Goodwill A/c ₹ 35,100
Anurag Pathak Changed status to publish June 8, 2023
Solution – I
Ans – c)
Working Notes:-
Solution – II
Ans – c)
Explanation:-
Atul’s share of goodwill = ₹ 35,100
60% brought in cash = 35,100 × 60% = ₹ 21060
premium for goodwill account is debited by ₹ 21060
rest 14040 is debited through his current account.
Thus the entry is
Premium for goodwill A/c Dr. 21060
Atul’s Current A/c Dr. 14040
To Amol’s Capital A/c 23,400
To Ameet’s Capital A/c 11,700
Anurag Pathak Changed status to publish June 8, 2023
