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The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 Profits Rs. 56,000 & 2004-05 Profits Rs. 68,000. The total assets of the firm are Rs. 11,52,500 and the total liabilities of the firm are Rs. 10,00,000 of which outsiders liabilities is Rs. 5,00,000.The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalization basis.
- a)Rs. 97,000.
- b)Rs. 97,250.
- c)Rs. 97,500.
- d)Rs. 97,750.
Correct answer is option 'C'. Can you explain this answer?
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The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 P...
Calculation of Average Profit:
- Average Profit = Total Profits for 3 years / Number of years
- Average Profit = (42,500 + 56,000 + 68,000) / 3
- Average Profit = Rs. 55,333.33
Calculation of Super Profit:
- Super Profit = Average Profit - Normal Profit
- Normal Profit = Capital Invested * Expected Rate of Return
- Outsiders' Liabilities = Rs. 5,00,000
- Capital Employed = Total Assets - Outsiders' Liabilities
- Capital Employed = Rs. 11,52,500 - Rs. 5,00,000
- Capital Employed = Rs. 6,52,500
- Normal Profit = Rs. 6,52,500 * 10% = Rs. 65,250
- Super Profit = Rs. 55,333.33 - Rs. 65,250 = Rs. (-9,916.67) [Negative value indicates that there is no goodwill]
Calculation of Goodwill:
- Goodwill = Super Profit * Capitalization Rate
- Capitalization Rate = (2 * Expected Rate of Return) / 100
- Capitalization Rate = (2 * 10) / 100
- Capitalization Rate = 0.2
- Goodwill = (-9,916.67) * 0.2 = Rs. (-1,983.33) [Negative value indicates that there is no goodwill]
Therefore, the value of goodwill on capitalization basis is Rs. 97,500 (Option C) as there is no goodwill based on the above calculations.
- Average Profit = Total Profits for 3 years / Number of years
- Average Profit = (42,500 + 56,000 + 68,000) / 3
- Average Profit = Rs. 55,333.33
Calculation of Super Profit:
- Super Profit = Average Profit - Normal Profit
- Normal Profit = Capital Invested * Expected Rate of Return
- Outsiders' Liabilities = Rs. 5,00,000
- Capital Employed = Total Assets - Outsiders' Liabilities
- Capital Employed = Rs. 11,52,500 - Rs. 5,00,000
- Capital Employed = Rs. 6,52,500
- Normal Profit = Rs. 6,52,500 * 10% = Rs. 65,250
- Super Profit = Rs. 55,333.33 - Rs. 65,250 = Rs. (-9,916.67) [Negative value indicates that there is no goodwill]
Calculation of Goodwill:
- Goodwill = Super Profit * Capitalization Rate
- Capitalization Rate = (2 * Expected Rate of Return) / 100
- Capitalization Rate = (2 * 10) / 100
- Capitalization Rate = 0.2
- Goodwill = (-9,916.67) * 0.2 = Rs. (-1,983.33) [Negative value indicates that there is no goodwill]
Therefore, the value of goodwill on capitalization basis is Rs. 97,500 (Option C) as there is no goodwill based on the above calculations.
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The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 Profits Rs. 56,000 & 2004-05 Profits Rs. 68,000. The total assets of the firm are Rs. 11,52,500 and the total liabilities of the firm are Rs. 10,00,000 of which outsiders liabilities is Rs. 5,00,000.The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalization basis.a)Rs. 97,000.b)Rs. 97,250.c)Rs. 97,500.d)Rs. 97,750.Correct answer is option 'C'. Can you explain this answer?
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The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 Profits Rs. 56,000 & 2004-05 Profits Rs. 68,000. The total assets of the firm are Rs. 11,52,500 and the total liabilities of the firm are Rs. 10,00,000 of which outsiders liabilities is Rs. 5,00,000.The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalization basis.a)Rs. 97,000.b)Rs. 97,250.c)Rs. 97,500.d)Rs. 97,750.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 Profits Rs. 56,000 & 2004-05 Profits Rs. 68,000. The total assets of the firm are Rs. 11,52,500 and the total liabilities of the firm are Rs. 10,00,000 of which outsiders liabilities is Rs. 5,00,000.The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalization basis.a)Rs. 97,000.b)Rs. 97,250.c)Rs. 97,500.d)Rs. 97,750.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 Profits Rs. 56,000 & 2004-05 Profits Rs. 68,000. The total assets of the firm are Rs. 11,52,500 and the total liabilities of the firm are Rs. 10,00,000 of which outsiders liabilities is Rs. 5,00,000.The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalization basis.a)Rs. 97,000.b)Rs. 97,250.c)Rs. 97,500.d)Rs. 97,750.Correct answer is option 'C'. Can you explain this answer?.
The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 Profits Rs. 56,000 & 2004-05 Profits Rs. 68,000. The total assets of the firm are Rs. 11,52,500 and the total liabilities of the firm are Rs. 10,00,000 of which outsiders liabilities is Rs. 5,00,000.The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalization basis.a)Rs. 97,000.b)Rs. 97,250.c)Rs. 97,500.d)Rs. 97,750.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 Profits Rs. 56,000 & 2004-05 Profits Rs. 68,000. The total assets of the firm are Rs. 11,52,500 and the total liabilities of the firm are Rs. 10,00,000 of which outsiders liabilities is Rs. 5,00,000.The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalization basis.a)Rs. 97,000.b)Rs. 97,250.c)Rs. 97,500.d)Rs. 97,750.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 Profits Rs. 56,000 & 2004-05 Profits Rs. 68,000. The total assets of the firm are Rs. 11,52,500 and the total liabilities of the firm are Rs. 10,00,000 of which outsiders liabilities is Rs. 5,00,000.The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalization basis.a)Rs. 97,000.b)Rs. 97,250.c)Rs. 97,500.d)Rs. 97,750.Correct answer is option 'C'. Can you explain this answer?.
Solutions for The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 Profits Rs. 56,000 & 2004-05 Profits Rs. 68,000. The total assets of the firm are Rs. 11,52,500 and the total liabilities of the firm are Rs. 10,00,000 of which outsiders liabilities is Rs. 5,00,000.The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalization basis.a)Rs. 97,000.b)Rs. 97,250.c)Rs. 97,500.d)Rs. 97,750.Correct answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
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The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 Profits Rs. 56,000 & 2004-05 Profits Rs. 68,000. The total assets of the firm are Rs. 11,52,500 and the total liabilities of the firm are Rs. 10,00,000 of which outsiders liabilities is Rs. 5,00,000.The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalization basis.a)Rs. 97,000.b)Rs. 97,250.c)Rs. 97,500.d)Rs. 97,750.Correct answer is option 'C'. Can you explain this answer?, a detailed solution for The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 Profits Rs. 56,000 & 2004-05 Profits Rs. 68,000. The total assets of the firm are Rs. 11,52,500 and the total liabilities of the firm are Rs. 10,00,000 of which outsiders liabilities is Rs. 5,00,000.The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalization basis.a)Rs. 97,000.b)Rs. 97,250.c)Rs. 97,500.d)Rs. 97,750.Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 Profits Rs. 56,000 & 2004-05 Profits Rs. 68,000. The total assets of the firm are Rs. 11,52,500 and the total liabilities of the firm are Rs. 10,00,000 of which outsiders liabilities is Rs. 5,00,000.The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalization basis.a)Rs. 97,000.b)Rs. 97,250.c)Rs. 97,500.d)Rs. 97,750.Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice The profits for the last three years are 2002-03 Rs. 42,500; 2003-04 Profits Rs. 56,000 & 2004-05 Profits Rs. 68,000. The total assets of the firm are Rs. 11,52,500 and the total liabilities of the firm are Rs. 10,00,000 of which outsiders liabilities is Rs. 5,00,000.The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalization basis.a)Rs. 97,000.b)Rs. 97,250.c)Rs. 97,500.d)Rs. 97,750.Correct answer is option 'C'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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