The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month.Calculate the value of goodwill on the basis of four years purchase of super profits based on the annuity of the four years. Take discounting rate as 10%.a)Rs. 13,500.b)Rs. 13,568.c)Rs. 13,668.d)Rs. 13,868.Correct answer is option 'D'. Can you explain this answer?

Explore Courses UPSC Exam UPSC Test Series Free Notes EduRev Infinity

Open App

Commerce Exam > Commerce Questions > The profits and losses for the last years are...

Join the Discussion on the App

The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 & 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month.Calculate the value of goodwill on the basis of four years purchase of super profits based on the annuity of the four years. Take discounting rate as 10%.

a)
Rs. 13,500.
b)
Rs. 13,568.
c)
Rs. 13,668.
d)
Rs. 13,868.

Correct answer is option 'D'. Can you explain this answer?

FREE This question is part of

Test: Treatment Of Goodwill In Partnership Accounts - 3

Attempt Test

Attempt this Test

Verified Answer

The profits and losses for the last years are 2001-02 Losses Rs. 10,00...

Calculation of Super Profits:

Super Profits = Average Profits - Normal Profits

Normal Profits = Average Capital Employed * Rate of Interest

Average Profits = (Profit of 2003-04 + Profit of 2004-05) / 2

Normal Profits = 2,00,000 * 12% = Rs. 24,000

Average Profits = (98,000 + 76,000) / 2 = Rs. 87,000

Super Profits = 87,000 - 24,000 = Rs. 63,000

Calculation of Goodwill:

Goodwill = Super Profits * Number of Years Purchase

Number of Years Purchase = 4

Goodwill = 63,000 * 4 = Rs. 2,52,000

Calculation of Present Value of Goodwill:

Discounting Rate = 10%

Number of Years = 4

Present Value of Goodwill = Goodwill / (1 + Discounting Rate)^Number of Years

Present Value of Goodwill = 2,52,000 / (1 + 0.10)^4 = Rs. 13,868

Therefore, the value of goodwill on the basis of four years purchase of super profits based on the annuity of the four years is Rs. 13,868.

View all questions of this test

View all answers Start learning for free

< Previous Question Next Question >

Explore Courses for Commerce exam

Similar Commerce Doubts

The average net profit expected of the firm in future are Rs 68000 per year and capital invested in the business by the firm in Rs 350000 the rate of interest expected from capital invested in the class of business is 12 percent the remuneration of partner is estimated is to be Rs 8000 for the year you are required. Find out the value of goodwill on the basis of two years purchase of super profit?

View answer

The average net profits expected to a firm in future are Rs 68,000 per year and capital invested in the business by the firm is Rs 3,50,000. The rate of interest expected from capital invested in this class of business is 12%. The fair remuneration of the manager is estimated to be Rs 8,000 for the year.?

View answer

Direction: Read the following text and answer the following questions on the basis of the same: After completing her Bachelors in Fashion Designing from a well-known college in France, Aditi has opened a boutique in a posh market in Kolkata. She has divided the work in smaller units and each employee is well trained to perform his/ her task efficiently. The sales persons are allowed to close a deal with a buyer by giving a maximum of 5 percent discount, whereas the decision to give any further discount rests with Aditi as the final authority. In the earlier period of her business venture, employees were asked to put in extra hours of work. In return she had promised to give them a special incentive within a year. Therefore, when the business was doing well, she honour her commitment by giving bonus to her employees. She also instructed her employees that communication from top to bottom should follow the official lines of command. However, she tends to be more biased towards her female employees, when it comes to solve the conflicts among employees. “Therefore, when the business was doing well, she honoured her commitment by giving bonus to her employees.” Which principle of management is being highlighted here?

View answer

A and B are two partners contributing RS-50000 and RS-40000 respectively, they agreed that interest on capital at 5% p. a will be given to partners. B will be given 10% of the profit as remuneration for managing the business and balance of profit is to be divided in their capital ratio. If profit during the year is RS-25000, find the share of each.?

View answer

The average Capital employed in a business is Rs 5,00,000 and average net profit earned is Rs 65,000. If normal rate of return on capital employed is 10%, it's Super profit will be :?

View answer

Top Courses for CommerceView all

Chapter Notes for Commerce

Economics Class 12

Economics Class 11

NCERT Books & Solutions for Commerce

Economics for CBSE Class 12 Board Examinations

Top Courses for Commerce

View all

The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month.Calculate the value of goodwill on the basis of four years purchase of super profits based on the annuity of the four years. Take discounting rate as 10%.a)Rs. 13,500.b)Rs. 13,568.c)Rs. 13,668.d)Rs. 13,868.Correct answer is option 'D'. Can you explain this answer?

Share with a Friend

Answer this doubt

Question Description
The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month.Calculate the value of goodwill on the basis of four years purchase of super profits based on the annuity of the four years. Take discounting rate as 10%.a)Rs. 13,500.b)Rs. 13,568.c)Rs. 13,668.d)Rs. 13,868.Correct answer is option 'D'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month.Calculate the value of goodwill on the basis of four years purchase of super profits based on the annuity of the four years. Take discounting rate as 10%.a)Rs. 13,500.b)Rs. 13,568.c)Rs. 13,668.d)Rs. 13,868.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month.Calculate the value of goodwill on the basis of four years purchase of super profits based on the annuity of the four years. Take discounting rate as 10%.a)Rs. 13,500.b)Rs. 13,568.c)Rs. 13,668.d)Rs. 13,868.Correct answer is option 'D'. Can you explain this answer?.

Solutions for The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month.Calculate the value of goodwill on the basis of four years purchase of super profits based on the annuity of the four years. Take discounting rate as 10%.a)Rs. 13,500.b)Rs. 13,568.c)Rs. 13,668.d)Rs. 13,868.Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce. Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.

Here you can find the meaning of The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month.Calculate the value of goodwill on the basis of four years purchase of super profits based on the annuity of the four years. Take discounting rate as 10%.a)Rs. 13,500.b)Rs. 13,568.c)Rs. 13,668.d)Rs. 13,868.Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month.Calculate the value of goodwill on the basis of four years purchase of super profits based on the annuity of the four years. Take discounting rate as 10%.a)Rs. 13,500.b)Rs. 13,568.c)Rs. 13,668.d)Rs. 13,868.Correct answer is option 'D'. Can you explain this answer?, a detailed solution for The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month.Calculate the value of goodwill on the basis of four years purchase of super profits based on the annuity of the four years. Take discounting rate as 10%.a)Rs. 13,500.b)Rs. 13,568.c)Rs. 13,668.d)Rs. 13,868.Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month.Calculate the value of goodwill on the basis of four years purchase of super profits based on the annuity of the four years. Take discounting rate as 10%.a)Rs. 13,500.b)Rs. 13,568.c)Rs. 13,668.d)Rs. 13,868.Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month.Calculate the value of goodwill on the basis of four years purchase of super profits based on the annuity of the four years. Take discounting rate as 10%.a)Rs. 13,500.b)Rs. 13,568.c)Rs. 13,668.d)Rs. 13,868.Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice Commerce tests.

Explore Courses for Commerce exam