List of top Accountancy Questions on Goodwill Valuation

Identify the components required to calculate goodwill using the Capitalisation of Average Profits Method.
A business has earned average profits of Rs. 1,00,000 during the last few years and the normal rate of return in a similar business is 25%. Ascertain the value of goodwill by capitalisation of average profits method, given that the value of net assets of the business is Rs. 3,20,000.
Hemant and Naman are partners in a firm sharing profits in the ratio of 3:2. Their capitals were Rs. 80,000 and Rs. 50,000 respectively. They admitted Samrat on Jan. 1, 2025 as a new partner for 1/5 share in the future profits. Samrat brought Rs. 60,000 as his capital. Calculate the value of goodwill of the firm.
______ goodwill is the excess of desired total capital of the firm over the actual combined capital of all partners.
The steps involved in calculation of Goodwill under Super Profit Method are: (A) Calculate the super profits by deducting normal profit from the average profits.
(B) Calculate the normal profit on firm's capital using normal rate of return.
(C) Calculate the average profit.
(D) Calculate goodwill by multiplying super profits by given years' purchase.

If the capital employed in a business is Rs 5,00,000, the average profit is Rs 60,000, and the normal rate of return is 6 %, the goodwill by the Capitalisation of Average Profit Method will be:

Average profit of firm is Rs 3,00,000. Total tangible assets in the firm are Rs 28,00,000 and outside liabilities are Rs 8,00,000. In same type of business, normal rate of return is 10% of capital employed. Calculate goodwill by Capitalisation of Super Profit Method.
At the time of change in profit sharing ratio, existing goodwill is written off among the partners in:
Balance of Share Forfeited Account on the forfeited share not yet re-issued is:
Amrita and Kalyani are partners sharing profits in the ratio of 3 : 2. They decided to expand the business by admitting Suraj as a new partner for 1/4th share. Suraj’s share of goodwill is valued at Rs 90,000 for which he compensated Amrita and Kalyani in the ratio 1 : 4. Following information is also provided:
  • Machinery : Rs 25,00,000
  • Land : Rs 10,00,000
  • Computer : Rs 2,50,000
  • Workmen compensation fund : Rs 5,30,000
Claim against workmen compensation is Rs 2,00,000 and goodwill appeared in the books at Rs 60,000.
Goodwill brought by Suraj will be distributed as:
While calculating Goodwill under super profit method, the sequence is followed as :
(A) Calculation of Super profit
(B) Calculation of Capital Employed
(C) Calculation of Normal profit
(D) Calculation of Average profit
(E) Calculation of Goodwill
Choose the correct answer from the options given below :
Based on the above, answer the question. Amrita and Kalyani are partners sharing profits in the ratio of 3 : 2. They decided to expand the business by admitting Suraj as a new partner for 1/4th share. Suraj’s share of goodwill is valued at Rs 90,000 for which he compensated Amrita and Kalyani in the ratio 1 : 4. Following information is also provided:
  • Machinery : Rs 25,00,000
  • Land : Rs 10,00,000
  • Computer : Rs 2,50,000
  • Workmen compensation fund : Rs 5,30,000
Claim against workmen compensation is Rs 2,00,000 and goodwill appeared in the books at Rs 60,000.
Share of revaluation profit of Amrita and Kalyani is:
If Average Capital Employed in a firm is Rs9,00,000; Average Profits Rs2,80,000 and Normal rate of return is 20%, then value of goodwill as per capitalisation of super profits is :