Question 1

From the profits of previous three years, Rs 150000, Rs 200000, and Rs250000/- the valueof goodwill at five years of purchase is -----------

Accepted Answer

The average profit for the three years is calculated as (150000 + 200000 + 250000) / 3 = 600000 / 3 = Rs 200000. The value of goodwill at five years of purchase is then 200000 * 5 = Rs 1000000 or Rs 10,00,000/-.

Question 2

From the profits of previous three years, Rs 150000, Rs 300000, and Rs250000/- and the loss in a year ( Rs. 100000/-) the value of goodwill at three years of purchase is ---------

Accepted Answer

Goodwill is calculated as the average profit of the past years multiplied by the number of years of purchase. The average profit is (150000 + 300000 + 250000 - 100000) / 4 = 150000. Therefore, goodwill is 150000 * 3 = 450000.

Question 3

If Average Profit of a certain firm for last five years is Rs5,00,000 , Normal profit is Rs 3,50,000/-. What would be the Value of Goodwill at 3years purchase of super profit

Accepted Answer

C

Question 4

Goodwill is defined as

Accepted Answer

Goodwill is considered an intangible asset because it represents non-physical assets, such as brand name, customer loyalty, and reputation, that a company acquires when it buys another business.

Question 5

Weighted average method of calculating goodwill is used when

Accepted Answer

The weighted average method is used when profits show a trend, as it gives more importance to recent profits, reflecting their relevance in the current business environment.

Question 6

The total capital employed in the company is ?8,00,000 a reasonable rate of return is 15%and the profit of the year is 412,00,000. The value of goodwill of the company as per thecapitalization method will be

Accepted Answer

The capitalization method calculates goodwill by subtracting the capitalized value of average profits from the actual capital employed. Here, the capitalized value of profits is (4,12,00,000 / 0.15) = 27,46,66,667. Subtracting the capital employed (8,00,000) gives the goodwill value of 7,20,00,000.

Question 7

A firm earns ?1,00,000. The normal rate of return is 10%. The assets of the companyamounted to ?11,00,000 and liabilities to ?1,00,000. Value of goodwill by the capitalization of average actual profit will be

Accepted Answer

The answer of A firm earns ?1,00,000. The normal rate...

Question 8

If the amount of super profit is negative ,what des it indicate

Accepted Answer

A negative super profit indicates that the business is not generating excess profits over the normal expected return, hence there is no goodwill.

Question 9

Which goodwill is recorded in the books of Accounts

Accepted Answer

Purchase Goodwill is recorded in the books of accounts when a business is purchased for more than the fair value of its separable net assets. Self-generated goodwill is not recorded because it is not purchased and does not have an objective cost basis.

Question 10

When does need valuation of Goodwill

Accepted Answer

Goodwill is typically valued during significant changes in a partnership, such as the admission of a new partner or the retirement or death of an existing partner, to ensure the fair distribution of profits and losses among the remaining or new partners.

Question 11

Which methods of valuation of Goodwill

Accepted Answer

All of the methods listed - Super Profit, Capitalization, and Average Profit - are recognized methods for the valuation of Goodwill.

Question 12

Which factor affecting th value of Goodwill

Accepted Answer

All the mentioned factors - quality of product, location of business, and efficient management - can affect the value of goodwill as they contribute to the reputation and success of a business.

Question 13

The profits of the last three years is 42000, 39000,45000. Value of goodwill of 2 years purchase of average profit is

Accepted Answer

The average profit for the last three years is calculated as (42000 + 39000 + 45000) / 3 = 126000 / 3 = 42000. The value of goodwill, based on 2 years purchase of the average profit, is 42000 * 2 = 84000.

Question 14

What do you mean by Super Profit

Accepted Answer

Super Profit is the excess of actual or average profits over the normal profits. Normal profits are the expected returns given the risk level and capital investment, while super profit is what exceeds this expected return.

Question 15

The excess of Average profit over normal profit is called

Accepted Answer

Super profit is the profit earned over and above the normal profit. Normal profit is the minimum amount of profit needed for a company to remain competitive in the market, so any profit above this level is considered super or excess profit.

Question 16

The monetary value of reputation of business is called

Accepted Answer

Goodwill is the term used to describe the monetary value of a business's reputation. It represents the intangible asset that arises when a business is valued at more than the sum of its tangible assets, often due to factors like brand reputation, customer relationships, and intellectual property.

Question 17

The profits of the last three years is55000,50000,45000. Value of goodwill of 2 yearspurchase of average profit is

Accepted Answer

The average profit over the last three years is calculated as (55000 + 50000 + 45000) / 3 = 50000. The value of goodwill, based on 2 years' purchase of the average profit, is 50000 * 2 = 100000.

Question 18

Which methods of valuation of Goodwill

Accepted Answer

Both Super profits and Average profits methods are commonly used for the valuation of Goodwill.

Question 19

Goodwill is an intangible Assets

Accepted Answer

Goodwill is considered an intangible asset because it represents non-physical assets such as brand reputation, customer loyalty, and other factors that improve a company's value.

Question 20

Goodwill be purchased

Accepted Answer

Goodwill can indeed be purchased, typically occurring when a company acquires another business for a price higher than the fair value of its net identifiable assets.

Quiz 6: Valuation and Calculation of Goodwill

From the profits of previous three years, Rs 150000, Rs 200000, and Rs250000/- the valueof goodwill at five years of purchase is -----------

From the profits of previous three years, Rs 150000, Rs 300000, and Rs250000/- and the loss in a year ( Rs. 100000/-) the value of goodwill at three years of purchase is ---------

If Average Profit of a certain firm for last five years is Rs5,00,000 , Normal profit is Rs 3,50,000/-. What would be the Value of Goodwill at 3years purchase of super profit

Goodwill is defined as

Weighted average method of calculating goodwill is used when

The total capital employed in the company is ?8,00,000 a reasonable rate of return is 15%and the profit of the year is 412,00,000. The value of goodwill of the company as per thecapitalization method will be

A firm earns ?1,00,000. The normal rate of return is 10%. The assets of the companyamounted to ?11,00,000 and liabilities to ?1,00,000. Value of goodwill by the capitalization of average actual profit will be

If the amount of super profit is negative ,what des it indicate

Which goodwill is recorded in the books of Accounts

When does need valuation of Goodwill

Which methods of valuation of Goodwill

Which factor affecting th value of Goodwill

The profits of the last three years is 42000, 39000,45000. Value of goodwill of 2 years purchase of average profit is

What do you mean by Super Profit

The excess of Average profit over normal profit is called

The monetary value of reputation of business is called

The profits of the last three years is55000,50000,45000. Value of goodwill of 2 yearspurchase of average profit is

Which methods of valuation of Goodwill

Goodwill is an intangible Assets

Goodwill be purchased