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Accountancy · 2026 · 3 marks
CBSE 2026 · Region 1 · Set 1 · Q17
Average profit of a firm during the last few years is ₹ 8,00,000. In similar business, the normal rate of return is 10% of the capital employed.…
Average profit of a firm during the last few years is ₹ $\displaystyle 8,00$,000. In similar business, the normal rate of return is $\displaystyle 10$% of the capital employed. Assets of the business were ₹ $\displaystyle 60,00,000$ and its external liabilities were ₹ $\displaystyle 20,00$,000. Calculate the value of goodwill by : (i) Capitalisation of super profits method (ii) Super profit method if the goodwill is valued at four years' purchase of super profits.
Marking-scheme solution
(i)
According to Capitalisation of Super profits method:
Goodwill= Super profits x $\displaystyle 100$
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
= ₹$\displaystyle 60,00,000$ - ₹$\displaystyle 20,00,000$
= ₹$\displaystyle 40,00,000$
Normal profit = Normal Rate of return/$\displaystyle 100$ x Capital Employed
= $\displaystyle 10$/$\displaystyle 100$ x₹$\displaystyle 40,00,000$
= ₹$\displaystyle 4,00,000$
Average profit = ₹$\displaystyle 8,00,000$
Super profit= Average profit- Normal profit
= ₹$\displaystyle 8,00,000$ - ₹$\displaystyle 4,00,000$
= ₹$\displaystyle 4,00,000$
Goodwill = ₹$\displaystyle 4,00,000$ x $\displaystyle 100$
$\displaystyle 10$
= ₹$\displaystyle 40,00,000$
(ii)
According to Super profit method:
Goodwill = Super profits x Number of years purchase
Super profit= Average profit- Normal profit
Normal profit = Normal Rate of return/$\displaystyle 100$ x Capital Employed.
Capital Employed= Assets- External Liabilities
= ₹$\displaystyle 60,00,000$ - ₹$\displaystyle 20,00,000$
= ₹$\displaystyle 40,00,000$
Normal profit = Normal Rate of return/$\displaystyle 100$ x Capital Employed.
= $\displaystyle 10$/$\displaystyle 100$ x₹$\displaystyle 40,00,000$
= ₹$\displaystyle 4,00,000$
Average profit = ₹$\displaystyle 8,00,000$
Super profit= Average profit- Normal profit
= ₹$\displaystyle 8,00,000$ - ₹$\displaystyle 4,00,000$
= ₹$\displaystyle 4,00,000$
Goodwill = ₹$\displaystyle 4,00,000$ x $\displaystyle 4$
= ₹$\displaystyle 16,00,000$
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CBSE Class 12 Accountancy past-paper question from the 2026 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.