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Varuna and Karuna are partners for equal shares. They admit Lata into partnership for 1/4th share. It was agreed to value goodwill of the firm at 4 year’s purchase of super profit. Normal rate of return is 15% of the capital employed. Average profit of the firm is ₹ 4,00,000. Balance Sheet of the firm as at 31st March, 2023 was as follows:

Liabilities Assets
Capital A/cs:

Varuna

Karuna

Reserves and Surplus

Sundry Creditors

Outstanding Expenses

Advances from Customers

5,00,000

5,00,000

2,00,000

50,000

1,50,000

Furniture

Computers

Electrical Fittings

Investments (Trade)

Stock

Sundry Debtors

Bills Receivable

Cash at bank

Cash in Hand

Deferred Revenue Expenditure:

Advertisement Suspense

4,00,000

3,00,000

1,00,000

2,00,000

3,00,000

3,00,000

50,000

2,00,000

50,000

19,50,000 19,50,000

Calculate the value of goodwill.

Anurag Pathak Changed status to publish May 3, 2024
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