✓ Board-verified
Accountancy · 2026 · 3 marks
CBSE 2026 · Region 1 · Set 3 · Q17
Average profit of a firm during the last few years is ₹ $\displaystyle 4,00$,000. In similar business, the normal rate of return is $\displaystyle 10$% of the capital employed. Assets of the business were ₹ $\displaystyle 50,00,000$ and its external liabilities were ₹ $\displaystyle 20,00$,000. Calculate the value of goodwill by : (i) Capitalisation of super profits method (ii) Super profits method if the goodwill is valued at three years purchase of super profits.
Marking-scheme solution
(i)
According to Capitalisation of Super profits method:
Goodwill= Super profits x $\displaystyle 100$ ………..………………………………………... ½
Normal Rate of return
Super profit= Average profit- Normal profit
Normal profit = Normal Rate of return/$\displaystyle 100$ x Capital Employed
Capital Employed= Assets- External Liabilities
= ₹$\displaystyle 50,00,000$ - ₹$\displaystyle 20,00,000$
= ₹$\displaystyle 30,00,000$
Normal profit = Normal Rate of return/$\displaystyle 100$ x Capital Employed
= $\displaystyle 10$/$\displaystyle 100$ x₹$\displaystyle 30,00,000$
= ₹$\displaystyle 3,00,000$ …………………………………………………. ½
Average profit = ₹$\displaystyle 4,00,000$
Super profit= Average profit- Normal profit
= ₹$\displaystyle 4,00,000$ - ₹$\displaystyle 3,00,000$
= ₹$\displaystyle 1,00,000$ ………………………………………………………….. ½
Goodwill = ₹$\displaystyle 1,00,000$ x $\displaystyle 100$
$\displaystyle 10$
= ₹$\displaystyle 10,00,000$………..…………………………………….…………...
(ii)
According to Super profit method:
Goodwill = Super profits x Number of years purchase………..…………..……... ½
Super profit= Average profit- Normal profit
Normal profit = Normal Rate of return/$\displaystyle 100$ x Capital Employed
Capital Employed= Assets- External Liabilities
= ₹$\displaystyle 50,00,000$ - ₹$\displaystyle 20,00,000$
= ₹$\displaystyle 30,00,000$
Normal profit = Normal Rate of return/$\displaystyle 100$ x Capital Employed
= $\displaystyle 10$/$\displaystyle 100$ x₹$\displaystyle 30,00,000$
= ₹$\displaystyle 3,00,000$
Average profit = ₹$\displaystyle 4,00,000$
Super profit= Average profit- Normal profit
= ₹$\displaystyle 4,00,000$ - ₹$\displaystyle 3,00,000$
= ₹$\displaystyle 1,00,000$
Goodwill = Super profits x Number of years purchase
= ₹$\displaystyle 1,00,000$ x $\displaystyle 3$
= ₹$\displaystyle 3,00,000$………..…………………………………….……….....
Practice Reconstitution of a Partnership Firm – Admission of a Partner →All Reconstitution of a Partnership Firm – Admission of a Partner questions
More from Reconstitution of a Partnership Firm – Admission of a Partner
- Asha and Indra were partners in a firm sharing profits and losses in the ratio of 3: 2. Their Balance Sheet…2026
- Devki and Neena were partners in a firm sharing profits and losses in the ratio of 4:3. Amar was admitted as…2026
- Alex, Benn and Cole were partners in a firm sharing profits and losses in 1th the ratio of 5: 3: 2. They…2024
- Sanjay and Vijay were partners in a firm sharing profits and losses in the ratio of 4: 3. On 1st April, 2025…2026
- The goodwill of a firm was valued on the basis of 3 years purchase of average profits for the last four…2023
- Mansi and Uma were partners in a firm and their capitals were 4,00,000 and ₹ 2,00,000 respectively. Normal…2026
- Atul, Beena and Sita were partners in a firm sharing profits and losses in the ratio of 8: 7: 5. Damini was…2024
- P hawana and Vedika were partners in a firm sharing profits and losses in the ratio of 5: 4. From 1st April,…2025
CBSE Class 12 Accountancy past-paper question from the 2026board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.