Ch-

3:MCQsVALUATI
ONOFGOODWI
LL

A. Mul
ti
pleChoi
ceQuest
ions
1. Goodwi l
lis_____
(
a)t
angi
bleasset
(
b) i
ntangi
bleasset
(
c) f
ict
it
iousasset
(
d) bot
h(b)&(
c)
2.Goodwi
l
loft
hef
ir
m ont
hebasi
sof2y
ear
s'pur
chaseofav
eragepr
ofi
toft
hel
ast
3y
ear
sisRs.25,
000.Fi
ndav
eragepr
ofi
t.
(
a) Rs.50,
000
(
b) Rs.25,
000
(
c) Rs.10,
000
(
d)Rs.2500
3.Cal
cul
atet
hev
alueofgoodwi
l
lat3y
ear
s'pur
chasewhen:Capi
talempl
oyed
Rs.2,
50,
000;
Aver
agepr
ofi
tRs.30,
000andnor
mal
rat
eofr
etur
nisI
0%.
(
a)Rs.3000 (
b)Rs.25,
000 (
c)Rs.30,
000 (
d)Rs.5,
000
4.Whatar
esuperpr
ofi
ts
a)
Act
ual
prof
it–Nor
mal
Prof
it b)Nor
mal
Prof
it-Act
ual
prof
it
c)Act
ual
prof
it+Nor
mal
Prof
it d)
Noneoft
heabov
e

5.Thenetasset
soft
hef
ir
mincl
udi
ngf
ict
it
iousasset
sof5,
000ar
e85,
000.
The
netl
i
abi
l
iti
esoft
hef
ir
m ar
e30,
000.
Thenor
mal
rat
eofr
etur
nis10%andt
he
av
eragepr
ofi
tsoft
hef
ir
m ar
e8,
000.
Cal
cul
atet
hegoodwi
l
laspercapi
tal
i
zat
ion
ofsuperpr
ofi
ts.
(
a)Rs.
20,
000 (
b)Rs.30,
000 (
c)Rs.25,
000 (
d)Noneoft
heabov
e

6.Whi
choft
hef
oll
owi
ngi
temsar
eaddedt
opr
evi
ousy
ear
’spr
ofi
tsf
orf
indi
ng
nor
mal
prof
it
sforv
aluat
ionofgoodwi
l
l.
?
a)
Lossonsal
eoff
ixedasset
s b)Lossduet
ofi
re,
ear
thquakeet
c
c)Under
val
uat
ionofcl
osi
ngst
ock d)Al
loft
heabov
e

7.
Underwhi
chmet
hodofv
aluat
ionofgoodwi
l
l,nor
mal
rat
eofr
etur
nisnot
consi
der
ed?
a)
Lossonsal
eoff
ixedasset
s b)Lossduet
ofi
re,
ear
thquakeet
c
c)Under
val
uat
ionofcl
osi
ngst
ock d)Al
loft
heabov
e

8.Fol
l
owi
ngar
ethemet
hodsofcal
cul
ati
nggoodwi
l
lex
c ept
:
a)
Superpr
ofi
tmet
hod b)Av
eragepr
ofi
tmet
hod
c)Wei
ght
edAv
eragepr
ofi
tmet
hod d)Capi
tal
prof
itmet
hod
9.Theexcessamountwhi
cht
hef
ir
mcangetonsel
l
ingi
tsasset
sov
erand
abov
ethesal
eabl
eval
ueofi
tsasset
siscal
l
ed:
a)
Sur
plus b)Superpr
ofi
ts
c)Reser
ve d)Goodwi
l
l
10.WhenGoodwi
l
lisnotpur
chasedgoodwi
l
laccountcan:
(
a)Nev
erber
aisedi
nthebooks
(
b)Ber
aisedi
nthebooks
(
c)Bepar
ti
all
yrai
sedi
nthebooks
(
d)Ber
aisedaspert
heagr
eementoft
hepar
tner
s
11.Thegoodwi
l
loft
hef
ir
misnotaf
fect
edby
:
(
a)Locat
ionoft
hef
ir
m
(
b)r
eput
ati
onoft
hef
ir
m
(
c)Bet
tercust
omerser
vices
(
d)Noneoft
heabov
e
12.
Wei
ght
edav
eragepr
ofi
tmet
hodofcal
cul
ati
nggoodwi
l
lisusedwhen:
(
a)Pr
ofi
tsar
enotequal
(
b)Pr
ofi
tsshowat
rend
(
c)Pr
ofi
tsar
efl
uct
uat
ing
(
d)Noneoft
heabov
e
13.Capi
tal
inv
est
edi
naf
ir
mis5,
00,
000.
Nor
mal
rat
eofr
etur
nis10%.
Aver
age
pr
ofi
toft
hef
ir
m ar
e64,
000(
aft
eranabnor
mal
lossof4,
000)
.Val
ueofgoodwi
l
lat
f
ourt
imest
hesuperpr
ofi
tswi
l
lbe:
(
a)Rs.
72,
000 (
b)Rs.40,
000 (
c)Rs.2,
40,
000 (
d)1,
80,
000

14.
Under-
--
--
--
--
-met
hod,
goodwi
l
list
heexcessofcapi
tal
i
zedv
alueofbusi
ness
ov
eract
ual
c api
tal
empl
oyed.
15.Thev
alueofgoodwi
l
lisbasedon-
--
--
--
--
--j
udgmentoft
hev
aluer.
16.
Whent
hev
alueofgoodwi
l
loft
hef
ir
misnotgi
venbuthast
obei
nfer
redon
t
hebasi
soft
henetwor
thoft
hef
ir
m,i
tiscal
l
ed…………….
.
17.
Goodwi
l
lisnotv
alueddur
ing………….
18.
IfSuperpr
ofi
tofaf
ir
mis10,
000,
i
tsv
alueofgoodwi
l
lwi
l
lbe………….
ifr
ateof
r
etur
nis8%
St
atet
rueorf
alse
19.Locat
ionofbusi
nessdoesnotaf
fectt
hegoodwi
l
lofbusi
ness.
20.“
Aver
agepr
ofi
tmet
hod”t
akesi
ntoconsi
der
ati
ont
hef
utur
emai
ntai
nabl
e
pr
ofi
ts.
21.
Goodwi
l
lcanbesol
dinpar
t.
22.Pur
chasedgoodwi
l
lmayar
iseonacqui
sit
ionofanex
ist
ingbusi
nessconcer
n.
23.Sel
f-
Gener
atedgoodwi
l
lisr
ecor
dedi
nthebooksofaccount
sassome
consi
der
ati
oni
spai
dfori
t
24.Goodwi
l
lisaf
ict
it
iousasset
25.
Goodwi
l
lisv
alueddur
ingdi
ssol
uti
onofaf
ir
m

1.(b)
,2 .(d), 3.(
d) ,
4(a),5(b), 6(d) 7.c, 8.d, 9(d)
, 10(a),
11(b), 12(b) 13(a)14Capital
i
sationofaver
ageprofi
t, 15.Subj
ecti
ve 16.
Hiddengoodwill 17.Dissolut
ionofthefir
m
181,25,
000 19.Fal
se,20.
True,21.
False,
22.True,23.Fal
se,24Fal
se,25False