✓ Board-verified
Accountancy · 2025 · 3 marks
CBSE 2025 · Region 6 · Set 2 · Q18
Jeevan and Kavi were partners in a firm with capitals of $\displaystyle 12,00,000$ and ₹ $\displaystyle 15,00,000$ respectively. Annual salary of the partners was $\displaystyle 2,00,000$ each. The market rate of interest was $\displaystyle 10$%. During the previous three years the profits were ₹ $\displaystyle 8,00,000$, ₹ $\displaystyle 9,00,000$ and $\displaystyle 7,00$,000. The goodwill of the firm is to be valued at $\displaystyle 2$ years ' purchase of the last $\displaystyle 3$ years' average super profits. Calculate the goodwill of the firm.
Marking-scheme solution
Goodwill = Average Super profit/Super Profit x Number of years’ purchase
Super Profits= Average Profits – Normal Profits
Average profits= $\displaystyle 8,00,000$+$\displaystyle 9,00,000$+ $\displaystyle 7,00,000$
$\displaystyle 3$
= ₹$\displaystyle 8,00,000$ $\displaystyle 1$ ½
Average profits after salary to partners= $\displaystyle 8,00,000$ – $\displaystyle 4,00,000$
= ₹$\displaystyle 4,00,000$
Normal Profits = Capital employed x normal rate of return/$\displaystyle 100$
Normal profits = ($\displaystyle 12,00,000$+$\displaystyle 15,00,000$) x $\displaystyle 10$/$\displaystyle 100$
= ₹$\displaystyle 2,70,000$
Average Super Profit/Super Profit= $\displaystyle 4,00,000$ - $\displaystyle 2,70,000$ $\displaystyle 1$ ½
= ₹$\displaystyle 1,30,000$
Goodwill = $\displaystyle 1,30,000$ x $\displaystyle 2$
= ₹$\displaystyle 2,60,000$
Alternatively,
Interest on capital employed = ($\displaystyle 12,00,000$+$\displaystyle 15,00,000$) x $\displaystyle 10$/$\displaystyle 100$
= $\displaystyle 27,00,000$ x $\displaystyle 10$/$\displaystyle 100$ = ₹ $\displaystyle 2,70,000$
Add: Partner’s salary = $\displaystyle 2,00,000$ x $\displaystyle 2$ =₹ $\displaystyle 4,00,000$
Normal Profits = $\displaystyle 6,70,000$ $\displaystyle 1$ ½
Average profits= $\displaystyle 8,00,000$+$\displaystyle 9,00,000$+ $\displaystyle 7,00,000$
$\displaystyle 3$
= ₹$\displaystyle 8,00,000$
Average Super profit /Super Profit = Average Profit – Normal Profit
= $\displaystyle 8,00,000$ - $\displaystyle 6,70,000$
= ₹ $\displaystyle 1,30,000$
Goodwill = Average Super profit / Super profit x Number of years’ purchase
= $\displaystyle 1,30,000$ x $\displaystyle 2$ $\displaystyle 1$ ½
= ₹$\displaystyle 2,60,000$
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 2025board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.