Courses

Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev

Principles and Practice of Accounting

Created by: Sushil Kumar
Full Screen

CA Foundation : Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev

The document Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev is a part of the CA Foundation Course Principles and Practice of Accounting.
All you need of CA Foundation at this link: CA Foundation
  • Goodwill is the value of reputation of a firm in respect of profits expected in future over and above the normal rate of profits.
  • Necessity for valuation of goodwill in a firm arises in the following cases:
    1.When the profit sharing ratio amongst the partners is changed;
    2.When a new partner is admitted;
    3.When a partner retires or dies, and
    4.When the business is dissolved or sold.
  • Methods for valuation of goodwill:-

(1) Average profit basis :  Average Profit = Total profit/Number of years
Goodwill = Average Profit x No. of Years’ purchased
The profits taken into consideration are adjusted with abnormal losses, abnormal gains, return on non-trade investments and errors.
(2) Super profit basis :
Calculate Capital Employed
Assets                    …….
Less: Liability          …….
Capital Employed   ……..

  1. Find the normal Rate of Return (NRR)
  2. Find Normal Profit=Capital Employed X Normal rate of Return
  3. Find Average Actual Profit
  4. Find Super Profit=Average Actual Profit-Normal Profit
  5. Find Goodwill=Super Profit X Number of Years Purchased

(3) Annuity basis :
Goodwill=Super Profit x Annuity Number
(4) Capitalization basis:
Goodwill = Super Profit / Normal Rate of Return

Download EduRev app here for CA Foundation preparation.

Up next >

< Previous

Content Details

Description
Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev notes for CA Foundation is made by best teachers who have written some of the best books of CA Foundation. It has gotten 40 views and also has 4.9 rating. You can download Free Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev pdf from EduRev by using search above. You can also find Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev ppt and other CA Foundation slides as well. If you want Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev Tests & Videos, you can search for the same too. CA Foundation Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev Summary and Exercise are very important for perfect preparation. You can see some Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev sample questions with examples at the bottom of this page. Complete Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev chapter (including extra questions, long questions, short questions, mcq) can be found on EduRev, you can check out CA Foundation lecture & lessons summary in the same course for CA Foundation Syllabus. EduRev is like a wikipedia just for education and the Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev images and diagram are even better than Byjus! Do check out the sample questions of Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev for CA Foundation, the answers and examples explain the meaning of chapter in the best manner. This is your solution of Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev search giving you solved answers for the same. To Study Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev for CA Foundation this is your one stop solution.

QUESTIONS & ANSWERS

Complete Syllabus of CA Foundation

CA Foundation

Dynamic Test

Test this topic

Content Category

CA Foundation

Related Searches

practice quizzes

,

study material

,

Objective type Questions

,

Important questions

,

Semester Notes

,

video lectures

,

Free

,

shortcuts and tricks

,

Extra Questions

,

Summary

,

MCQs

,

Viva Questions

,

past year papers

,

pdf

,

Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev

,

mock tests for examination

,

Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev

,

Unit 2: Treatment of Goodwill in Partnership Accounts (Summary) CA Foundation Notes | EduRev

,

Sample Paper

,

Previous Year Questions with Solutions

,

ppt

,

Exam

;
Follow Us
© 2015-20 EduRev