Goodwill Valuation
6 previous year questions.
High-Yield Trend
Chapter Questions 6 MCQs
Statement I: The balance in the Statement of Profit and Loss in the Balance Sheet of Samta Ltd. showed a deficit of \rupee2,00,000 on 31.03.2023 and a surplus of \rupee3,00,000 on 31.03.2024. \rupee5,00,000 will be considered as profit earned during the year for preparing Cash Flow Statement.
Statement II: On 31.03.2023 the goodwill account of Zeeta Ltd. showed a balance of \rupee4,00,000 and on 31.03.2024 it showed a balance of \rupee5,00,000. \rupee1,00,000 will be considered as goodwill acquired during the year for the preparation of Cash Flow Statement.
Choose the correct option from the following:
Mita and Vihaan were partners in a firm sharing profits and losses in the ratio of 3:2.
On 31st March, 2024 their Balance Sheet was as follows:
Balance Sheet of Mita and Vihaan as at 31st March, 2024
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Sundry Creditors | 2,00,000 | Cash | 50,000 |
| Capitals: | Sundry Debtors | 2,00,000 | |
| Mita | 4,00,000 | Less: Provision for Doubtful Debts | (7,000) |
| Vihaan | 3,00,000 | 1,93,000 | |
| Stock | 2,50,000 | ||
| Plant and Machinery | 3,50,000 | ||
| Patents | 57,000 | ||
| Total | 9,00,000 | Total | 9,00,000 |
On the above date, Zen was admitted as a new partner for 4/15 share in the profits on the following terms:
- Zen will bring ₹3,00,000 as his capital and his share of goodwill premium in cash. On Zen’s admission, goodwill of the firm was valued at ₹4,12,500.
- The provision for bad debts will be maintained at 5% of the debtors.
- Stock will be valued at ₹2,00,000, plant and machinery at ₹4,00,000 and patents at ₹1,20,000.
- There was a bill of ₹30,000 for goods purchased which was omitted from the books.
Pass necessary journal entries for the above transactions in the books of the firm on Zen’s admission
Calculate the goodwill of the firm.
Asha, Ashish and Naman were partners in a firm sharing profits and losses in the ratio of 2 : 5 : 3. The firm closes its books on 31st March every year. On 31st December, 2024 Ashish died. On the date of his death, there was a balance of ₹3,00,000 in his capital account and ₹2,00,000 in General Reserve.
The partnership deed provided that on the death of a partner, his representatives will be entitled to the following:
(i) Balance in the capital account and interest on the same @ 10% p.a.
(ii) His share in the goodwill of the firm. The goodwill of the firm on Ashish’s death was valued at ₹6,00,000.
(iii) His share in the profits of the firm to be calculated on the basis of previous year’s profit. The profit of the firm for the year ended 31st March, 2024 was ₹3,60,000.
Prepare Ashish’s Capital Account to be presented to his executors.