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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
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