• Doremon, Sinchan and Nobita are partners sharing profits

and losses in the ratio of 3:2:1. With effect from 1st April, 2022
they agree to share profits equally. For this purpose, goodwill
is to be valued at two year’s purchase of the average profit of
last four years which were as follows:

• 31st March, 2019 Rs. 50,000

• 31st March, 2020 Rs. 1,20,000
• 31st March, 2021 Rs. 1,80,000
• 31st March, 2022 Rs. 70,000(Loss)

• On 1st April, 2021 a Motor Bike costing Rs. 50,000 was

purchased and debited to travelling expenses account, on
which depreciation is to be charged @ 20 % p.a. by Staright
Line Method. The firm also paid an annual insurance
premium of Rs. 20,000 which had already been charged to
Profit & Loss account for all the years.

• You are required to calculate the value of goodwill.

• Luv and Kush are partners sharing profits equally. They admit
Shubh into partnership for equal share. Goodwill was agreed to
be valued at two year’s purchase of average profit of last four
years. Profits for last four years were:
Year Ended Normal Profit/Loss
31st March, 2019 70,000
31st March, 2020 1,00,000
31st March, 2021 55,000(loss)
31st March, 2022 1,44,000

The books of accounts of the firm revealed as follows:

• Firm had abnormal gain of Rs. 10,000 during the year ended 31st
March, 2019.
• Firm incurred abnormal loss of Rs. 20,000 during the year ended
31st March, 2020.
• Repairs to car of Rs. 50,000 was wrongly debited to Vehicles
Account on 1st June, 2020. Depreciation was charged on Vehicles
@ 12% p.a. on Straight Line Method
• Dinesh and Mahesh are partners sharing profits and losses
in the ratio of 3:2. They admit Ramesh into partnership for
1/4th share in profits. Ramesh brings in his share of
goodwill in cash. Goodwill for this purpose shall be
calculated at two years' purchase of the weighted average
normal profit of past three years. Weights being assigned to
each year
(a) 2017−1; (b) 2018−2 (c) 2019−3.
• Profits of the last three years were:
• (a) 2017 − Profit ₹ 50,000 (including profits on sale of assets ₹
5,000).
• (b) 2018 − Loss ₹ 20,000 (including loss by fire ₹ 35,000).
• (c) 2019 − Profit ₹ 70,000 (including insurance claim received
₹ 18,000 and interest on investments and dividend received ₹
8,000).
• Calculate the value of goodwill. Also, calculate the goodwill
brought in by Ramesh.
• Mahesh and Suresh are partners and they admit Naresh into
partnership. They agreed to value goodwill at three years' purchase on
Weighted Average Profit Method taking profits for the last five years.
They assigned weights from 1 to 5 beginning from the earliest year and
onwards. The profits for the last five years were as follows:
Year Ended Profits (Rs.)
31st Mar 2015 1,25,000
31st Mar 2016 1,40,000
31st Mar 2017 1,20,000
31st Mar 2018 55,000
31st Mar 2019 2,57,000
Scrutiny of books of account revealed the following:
(a) A second-hand machine was purchased for ₹ 5,00,000 on 1st July, 2017 and ₹
1,00,000 were spent to make it operational.
(b) ₹ 1,00,000 were wrongly debited to Repairs Account.
(c) Machinery is depreciated @ 20% p.a. on Written Down Value Method.
(d) Closing Stock as on 31st March, 2018 was undervalued by ₹ 50,000.
(e) Remuneration to partners was to be considered as charge against profit and
remuneration of ₹ 20,000 p.a. for each partner was considered appropriate.
Calculate the value of goodwill.
• Ayub and Amit are partners in a firm and they admit
Jaspal into partnership w.e.f. 1st April, 2023. They
agreed to value goodwill at 3 year’s purchase of Super
Profit Method for which they decided to average profit
of last 5 years. The profits of the last 5 years were:
Year Ended Profit (Rs.)
31st March, 2019 1,50,000
31st March, 2020 1,80,000
31st March, 2021 1,00,000 (Including abnormal
loss of Rs. 1,00,000)
31st March, 2022 2,60,000 ( Including abnormal
gain of Rs. 40,000)
31st March, 2023 2,40,000
The firm has total assets of Rs. 20,00,000 and Outside
Liabilities of Rs. 5,00,000 as on that date. Normal Rate
of Return in similar business is 10%. Calculate value of
Goodwill.
• The average profit earned by a firm is Rs. 75,000 which
includes undervaluation of stock of Rs. 5,000 on an average
basis. The capital invested in the business is Rs. 7,00,000
and the normal rate of return is 7%. Calculate goodwill of
the firm on the basis of 5 times the super profit.
• M/s. Supertech India has assets of Rs. 5,00,000, whereas
Liabilities are: Partner’s Capitals- Rs. 3,50,000, General
Reserve – Rs. 60,000 and Sundry creditors – Rs. 90,000. If
Normal Rate of Return is 10% and Goodwill of the firm is
valued at Rs. 90,000 at 2 years purchase of Super profit, the
Average Profit of the firm will be?
• On 1st April, 2014 a firm had assets of Rs. 1,00,000 excluding
stock of Rs. 20,000. Partner’s Capital Accounts showed a
balance of Rs. 60,000. The current liabilities were Rs. 10,000
and the balance constituted the reserve. If the normal rate
of return is 8%, the Goodwill of the firm is valued at Rs.
60,000 at four year’s purchase of super profit, find average
profit of the firm.
• Yash and Karan were partners in an interior designer firm. Their fixed
capital were Rs. 6,00,000 and Rs. 4,00,000 respectively. There were credit
balances in their current accounts of Rs. 4,00,000 and Rs. 5,00,000
respectively. The firm had a balance of Rs. 1,00,000 in General Reserve.
The firm did not have any liability. They admitted Radhika into
partnership for 1/4th share in the profits of the firm. The average profits
of the firm for the last five years were Rs. 5,00,000. Calculate the value of
goodwill of the firm by capitalisation of average profits method. The
normal rate of return in the business is 10%.

• Puneet and Tarun are in restaurant business having credit balance in

their fixed Capital Accounts as Rs. 2,50,000 each. They have credit
balances in their Current Accounts of Rs. 30,000 and Rs. 20,000
respectively. The firm does not have any liability. They are regularly
earning profits and their average profit of last 5 years is Rs. 1,00,000. If
the normal rate of return is 10%, find the value of goodwill by
Capitalisation of Super Profit Method.