In this article, I have provided the solutions for the Goodwill chapter of TS Grewal Book 2024-24. Here are the class 12 goodwill TS Grewal Solutions 2024-25.
Topics Discussed
Solution 1
Profits for the last 4 years:
| Years | Amount (Rs.) |
| 2021 | 12,000 |
| 2022 | 18,000 |
| 2023 | 16,000 |
| 2024 | 14,000 |
Total Profits = Rs. 60,000
Average Profits of last 4 years = Rs. 15,000
No. of Years Purchase = 3
Value of Goodwill = 15,000*3 = Rs. 45,000
Solution 2
Profits for the last 5 years:
| Years | Amount (Rs.) |
| 2020 | 4,00,000 |
| 2021 | 3,98,000 |
| 2022 | 4,00,000 |
| 2023 | 4,45,000 |
| 2024 | 5,00,000 |
Total Profits = Rs. 21,93,000
Average Profits of last 5 years = 21,93,000/5 = Rs. 4,38,600
No. of Years Purchase = 4
Value of Goodwill = 4,38,600*6 = Rs. 17,54,400
Solution 3
Profits for the last 5 years:
| Years | Amount (Rs.) |
| 2020 | 14,000 |
| 2021 | 15,500 |
| 2022 | 10,000 |
| 2023 | 16,000 |
| 2024 | 15,000 |
Total Profits (Last 4 Years) = Rs. 56,500
Average Profits (Last 4 Years) = 56,500/4 = Rs. 14,125
Total Profits (Last 5 Years) = Rs. 70,500
Average Profits (Last 5 Years) = 70,500/5 = Rs. 14,100
As the average profits for the last 4 years are more, we will calculate goodwill based on the last 4 years:
No. of Years Purchase = 4
Goodwill = 14,125*4 = Rs. 56,500
Solution 4
Calculation of Average Profits:
| Years | Actual Profits (Rs.) | Adjustment (Rs.) | Adjusted Profits (Rs.) |
| 31 Mar. 20 | 1,25,000 | – | 1,25,000 |
| 31 Mar. 21 | 1,00,000 | 25,000 | 1,25,000 |
| 31 Mar. 22 | 1,87,500 | – | 1,87,500 |
| 31 Mar. 23 | (62,500) | – | (62,500) |
| 31 Mar. 24 | 1,25,000 | – | 1,25,000 |
Total = Rs. 5,00,000
Average Profits = 5,00,000/5 = Rs. 1,00,000
No. of Years Purchase = 3
Value of Goodwill = Rs. 3,00,000
Solution 5
Calculation of Average Profits:
| Years | Actual Profits (Rs.) | Adjustment (Rs.) | Adjusted Profits (Rs.) |
| 31 Mar. 22 | 1,10,000 | 30,000 | 80,000 |
| 31 Mar. 23 | (80,000) | 1,10,000 | 30,000 |
| 31 Mar. 24 | 30,000 | 40,000 | 70,000 |
Total Profits = Rs. 1,80,000
Average Profits for last 3 years = 1,80,000/3 = Rs. 60,000
No. of Years Purchase = 2
Goodwill = Rs. 1,20,000
Reason for Adjustments:
- Gain on sale of fixed assets is an abnormal profit, hence deducted.
- Voluntary retirement compensation is an abnormal non-recurring expense and hence added back.
- Loss of stock by fire is an abnormal non-recurring expense and hence added back to find normal profits.
Solution 6
Calculation of Average Profits:
| Years | Actual Profits (Rs.) | Adjustment (Rs.) | Adjusted Profits (Rs.) |
| 31 Mar. 22 | 1,00,000 | 12,500 | 87,500 |
| 31 Mar. 23 | 1,25,000 | 25,000 | 1,50,000 |
| 31 Mar. 24 | 1,12,500 | 12,500 | 1,00,000 |
Total Profits = Rs. 3,37,500
Average Profits = 3,37,500/3 = Rs. 1,12,500
No. of Years Purchase = 2
Goodwill = 1,12,500*2 = Rs. 2,25,000
Reasons for Adjustment:
- Abnormal gain is non-recurring profits and hence deducted.
- Abnormal loss is a non-recurring expense and hence added back.
- The insurance premium is a new expenditure to be incurred and hence deducted.
Solution 7
Calculation of Average Profits:
| Years | Actual Profits (Rs.) | Adjustments (Rs.) | Adjusted Profits (Rs.) |
| 31 Mar. 20 | 1,50,000 | – | 1,50,000 |
| 31 Mar. 21 | 3,50,000 | – | 3,50,000 |
| 31 Mar. 22 | 5,00,000 | – | 5,00,000 |
| 31. Mar. 23 | 7,10,000 | 10,000 | 7,20,000 |
| 31. Mar. 24 | (5,90,000) | 1,00,000+(25,000)+(10,000) | (5,25,000) |
Total Profits = Rs. 11,75,000
Average Profits = 11,75,000/5 = Rs. 2,35,000
No. of Years Purchase = 4
Value of Goodwill = 2,35,000*4 = Rs. 9,40,000
Reasons for Adjustments:
- The purchase of a car is a capital expenditure. It was wrongly charged to revenue and hence added back.
- Since the car is a capital expenditure, depreciation should be provided on it every year for the year of purchase.
- Interest on non-trade investments is not a business profit. Hence, this is to be excluded while finding profits for the purchase of finding goodwill.
Solution 8
Calculation of Average Profits:
| Years | Actual Amount (Rs.) | Adjustments (Rs.) | Adjusted Profits (Rs.) |
| 31 Mar. 21 | 80,000 | 20,000 | 1,00,000 |
| 31 Mar. 22 | 1,45,000 | (25,000) | 1,20,000 |
| 31 Mar. 23 | 1,60,000 | (15,000) | 1,45,000 |
| 31 Mar. 24 | 2,00,000 | – | 2,00,000 |
Total Profits = Rs. 5,65,000
Average Profits = 5,65,000/4 = Rs. 1,41,250
No. of Years Purchase = 2
Value of Goodwill = 1,41,250*2 = Rs. 2,82,500
Reasons for Adjustments:
- Abnormal loss is non-recurring and hence added back.
- Profit on sale of assets is a non-recurring income, hence deducted.
- Insurance premium omitted is an expense for business and should be deducted to find real profits.
Solution 9
Calculation of Weighted Average Profit:
| Year | Profits (Rs.) | Weights | Weighted Profit (Rs.) (Profit*Weight) |
| 31 Mar. 20 | 20,000 | 1 | 20,000 |
| 31 Mar. 21 | 24,000 | 2 | 48,000 |
| 31 Mar. 22 | 30,000 | 3 | 90,000 |
| 31 Mar. 23 | 25,000 | 4 | 1,00,000 |
| 31 Mar. 24 | 18,000 | 5 | 90,000 |
Total = Rs. 3,48,000
Weighted Average Profit = Total of Weighted Profit/Total of Weights
= 3,48,000/15
= Rs. 23,200
Goodwill = Weighted Average Profits*No. of Years Purchase
= 23,200*3 = Rs. 69,600
Solution 10
Calculation of Weighted Average Profit:
| Year | Profits (Rs.) | Salary Adjustment | Adjusted Profits (Rs.) | Weight | Weighted Profit (Rs.) |
| 31 Mar. 22 | 1,40,000 | (90,000) | 50,000 | 1 | 50,000 |
| 31 Mar. 23 | 1,01,000 | (90,000) | 11,000 | 2 | 22,000 |
| 31 Mar. 24 | 1,30,000 | (90,000) | 40,000 | 3 | 1,20,000 |
Total = Rs. 1,92,000
Weighted Average Profit = Total of Weighted Profit/Total of Weights
= 1,92,000/6
= Rs. 32,000
Goodwill = Weighted Average Profits*No. of Years Purchase
= 32,000*4
= Rs. 1,28,000
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Solution 11
Calculation of Average Profit:
| Year | Profits (Rs.) | Salary Adjustment | Adjuted Profits (Rs.) |
| 1 | 3,00,000 | (1,20,000) | 1,80,000 |
| 2 | 3,60,000 | (1,20,000) | 2,40,000 |
| 3 | 4,20,000 | (1,20,000) | 3,00,000 |
Total Profits = Rs. 7,20,000
Average Profit = 7,20,000/3 = Rs. 2,40,000
Capital Employed = Rs. 1,00,000
Normal Rate of Return = 15%
Normal Profits = 10,00,000*15/100 = Rs. 1,50,000
Super Profit = 2,40,000-1,50,000 = Rs. 90,000
No. of Years Purchase = 2
Goodwill = 90,000*2 = Rs. 1,80,000
Solution 12
Capital Employed = Rs. 50,000
Normal Rate of Return = 15%
Normal Profits = 50,000*15/100 = Rs. 7,500
Average Profit = Rs. 16,000
Super Profit = 16,000-7,500 = Rs. 8,500
No. of Years Purchase = 4
Goodwill = 8,500*4 = Rs. 34,000
Solution 13
Capital Employed = Rs. 1,00,000
Normal Rate of Return = 15%
Normal Profits = Rs. 15,000
Average Profit = 30,000+36,000+42,000/3
= Rs. 36,000
Super Profit = 36,000 – 15,000
= Rs. 21,000
No. of Years Purchase = 2
Goodwill = 21,000*2 = Rs. 42,000
Solution 14
A’s Capital = Rs. 1,20,000
B’s Capital = Rs. 80,000
Total Capital = Rs. 2,00,000
Annual Rate of Interest (Normal Rate) = 20%
Normal Profits = 2,00,000*20/100 = Rs. 40,000
Average Profit (Last 3 Years) = 34,000+38,000+30,000/3
= Rs. 34,000
Super Profit = 34,000-40,000
= Rs. (6,000)
Since super profit is negative, the firm has no goodwill.
Solution 15
Calculation of Capital Employed:
Total Assets = Rs. 22,00,000
Less: outside liabilities = (5,60,000)
Capital Employed = Rs. 16,40,000
Normal Rate of Return = 10%
Normal Profits = 16,40,000*10/100 = Rs. 1,64,000
Average Profit = Rs. 8,00,000
Super Profit = 8,00,000-1,64,000
= Rs. 6,36,000
No. of Years Purchase = 2.5
Goodwill = Rs. 15,90,000
Solution 16
Average Capital Employed = Rs. 2,00,000
Normal Rate of Return = 10%
Normal Profit = 2,00,000*10/100 = Rs. 20,000
Average expected net profit = Rs. 36,000
Less: Remuneration to partners = (6,000)
Actual adjusted average profit = Rs. 30,000
Super Profit = 30,000-20,000
= Rs. 10,000
No. of Years Purchase = 2
Value of Goodwill = Rs. 20,000
Solution 17
Capital Employed = Rs. 80,000
Normal Rate of Return = 15%
Normal Profit = Rs. 12,000
Average Profit = 17,000+20,000+23,000/3
= Rs. 20,000
Super Profit = Rs. 8,000
No. of Years Purchase = 2
Goodwill = Rs. 16,000
Solution 18
Capital Employed = Total Assets – Creditors
= 75,000-5,000
= Rs. 70,000
Normal Rate of Return = 20%
Normal Profit = 70,000*20/100 = Rs. 14,000
Average Profit = x
Super Profit = (x-14,000)
No. of Years Purchase = 4
Goodwill = (x-14,000)*4
24,000 = (x-14,000)*4
x = Rs. 20,000
Average Profit = x = Rs. 20,000
Solution 19
Let the capital employed be x.
Normal Rate of Return = 10%
Normal Profit = x*10/100 = 0.1x
Average Profit = Rs. 2,00,000
Super Profit = 2,00,000-0.1x
No. of years Purchase = 4
Value of Goodwill = (2,00,000-0.1x)*4
2,50,000 = 8,00,000 – 0.4x
0.4x = 8,00,000-2,50,000
0.4x = 5,50,000
x = Rs. 13,75,000
Capital Employed = x = Rs. 13,75,000
Solution 20
Average Profit = Rs. 1,80,000
Average Capital Employed = Rs. 12,50,000
Normal Rate of Return = x
Normal Profit = (x/100*12,50,000)
Goodwill = Rs. 1,60,000
No. of Years Purchase = 2
Goodwill = Super Profit*2
1,60,000 = [1,80,000-(x/100*12,50,000)]*2
1,60,000*2 = 1,80,000-12,500x
x = 1,00,000/12,500
x = 8
Normal Rate of Return = x = 8
Solution 21
Average Profit = Rs. 1,20,000
Normal Rate of Return = 15%
Goodwill = Rs. 1,35,000
No. of Years Purchase = 3
To Find: Capital Employed
Let capital employed be x.
Normal Profit = 15/100*x = 0.15x
Goodwill = [Average Profit – Normal Profit]*No. of Years Purchase
1,35,000 = [1,20,000-0.15x]*3
1,35,000/3 = 1,20,000-0.15x
45,000 = 1,20,000-0.15x
0.15x = 75,000
x = 5,00,000
x = Capital Employed = Rs. 5,00,000
Solution 22
Capital Employed = Rs. 6,30,000
Normal Rate of Return = 5%
Normal Profit = 5/100*6,30,000 = Rs. 31,500
Average Profit = Rs. 1,00,000
Add: Undervaluation of Stock = 40,000
Adjusted Average Profits = Rs. 1,40,000
Super Profit = Average Profit – Normal Profit
= 1,40,000-31,500
= Rs. 1,08,500
No. of Years Purchase = 5
Goodwill = Super Profit*No. of Years Purchase
Goodwill = 1,08,500*5
Goodwill = Rs. 5,42,500
Solution 23
Capital Employed = Rs. 42,00,000
Normal Rate of Return = 15%
Normal Profit = 15/100*42,00,000 = Rs. 6,30,000
Average Profit = Rs. 7,50,000
Less: Overvaluation of Stock = (30,000)
Adjusted Average Profit = Rs. 7,20,000
Super Profit = 7,20,000-6,30,000
= Rs. 90,000
No. of Years Purchase = 3
Goodwill = 90,000*3 = Rs. 2,70,000
Goodwill Notes Class 12 Accountancy
Solution 24
Calculation of Average Profit:
| Year Ended | Net Profit (Rs.) | Adjustment | Adjusted Profit (Rs.) |
| 31 Mar. 19 | 1,50,000 | – | 1,50,000 |
| 31 Mar. 20 | 1,80,000 | – | 1,80,000 |
| 31 Mar. 21 | 1,00,000 | 1,00,000 | 2,00,000 |
| 31 Mar. 22 | 2,60,000 | (40,000) | 2,20,000 |
| 31 Mar. 23 | 2,40,000 | – | 2,40,000 |
Total Profit = Rs. 9,90,000
Average Profit = 9,90,000/5 = Rs. 1,98,000
Capital Employed = Total Assets-Outside Liabilities
= 20,00,000-5,00,000
= Rs. 15,00,000
Normal Rate of Return = 10%
Normal Profit = 15,00,000*10/100 = Rs. 1,50,000
Super Profit = Rs. 48,000 (Average Profit-Normal Profit)
No. of Years Purchase = 3
Goodwill = 48,000*3 = Rs. 1,44,000
Solution 25
Profit for the year = Rs. 2,00,000
Normal Rate of Return = 10%
Capitalized value of business = 2,00,000*100/10 = Rs. 20,00,000
Total Actual Capital of the Firm = Rs. 16,00,000
Goodwill = Capitalized Value-Total Actual Capital
Goodwill = Rs. 4,00,000
Solution 26
Average Profit = Rs. 3,00,000
Normal Rate of Return = 15%
Capitalized Value of Business = 3,00,000*100/15 = Rs. 20,00,000
Capital Employed = Total Assets-Liabilities
= 17,00,000-2,00,000
= Rs. 15,00,000
Goodwill = 20,00,000-15,00,000
Goodwill = Rs. 5,00,000
Solution 27
Capitalized value of average profit = Rs. 7,50,000
Capital Employed =3,00,000-2,00,000 = Rs. 5,00,000
Goodwill = Capitalized Value-Capital Employed
Goodwill = 7,50,000-5,00,000
Goodwill = Rs. 2,50,000
Solution 28
Average Profit = Rs. 1,00,000
Normal Rate of Return = 10%
Capitalized Value = Rs. 10,00,000
Capital Employed = Puneet’s Capital A/c+Tarun’s Capital A/c+Puneet’s Current A/c+Tarun’s Current A/c
= 2,50,000+2,50,000+30,000+20,000
= Rs. 5,50,000
Goodwill = 10,00,000-5,50,000 = Rs. 4,50,000
Solution 29
Average Profit = 2,61,000/5 = Rs. 52,200
Capitalization Rate/Normal Rate = 20%
Capitalized Value of Business = 52,200*100/20 = Rs. 2,61,000
Actual net assets/Capital Employed = 2,00,000
Goodwill = 2,61,000-2,00,000 = Rs. 61,000
Solution 30
Average Profit = Rs. 4,00,000
Capital Employed = Assets-External Liabilities
= 40,00,000-7,20,000
= Rs. 32,80,000
Normal Rate of Return = 10%
Normal Profit = 32,80,000*10/100 = Rs. 3,28,000
Super Profit = 4,00,000-3,28,000 = Rs. 72,000
i) Normal Rate of Return = 10%
Goodwill by capitalization of super profits = 72,000*100/10 = Rs. 7,20,000
ii) No. of Years Purchase = 3
Goodwill = 72,000*3 = Rs. 2,16,000
Solution 31
Average Profit = Rs. 5,00,000
Capital Employed = Total Assets-Outsider Liability
= 55,00,000-14,00,000 = Rs. 41,10,000
Normal Rate of Return = 10%
Normal Profit = Rs. 4,10,000
Goodwill as per capitalization of super profit:
Super Profit = Rs. 90,000
Normal Rate of Return = 10%
Goodwill = Rs. 9,00,000
Goodwill as per capitalization of average profit:
Average Profit = Rs. 5,00,000
Normal Rate of Return = 10%
Capitalized Value of Business = Rs. 50,00,000
Capital Employed = Rs. 41,00,000
Goodwill = Rs. 9,00,000
Solution 32
Capital Employed = Total Assets+Stock-Current Liabilities
= 1,00,000+20,000-10,000 = Rs. 1,10,000
Normal Rate of Return = 8%
Normal Profit = 1,10,000*8/100 = Rs. 8,800
Let actual profit be x.
Super Profit = (x-8,800)
No. of Years Purchase = 4
Goodwill = (x-8,800)*4
Value of Goodwill = Rs. 60,000
(x-8,800)*4 = 60,000
x-8,800 = 60,000/4
x-8,800 = 15,000
x = 15,000+8,800 = 23,800
Actual Profit = x = Rs. 23,800
Solution 33
Super Profit = Rs. 50,000
Normal Rate of Return = 10%
Value of Goodwill = Rs. 5,00,000
Solution 34
Average Profit = Rs. 30,000
Capital Employed = Rs. 2,00,000
Normal Rate of Return = 10%
Normal Profit = Rs. 20,000
Super Profit = 30,000-20,000 = Rs. 10,000
Normal Rate of Return = 10%
Goodwill = 10,000*100/10 = Rs. 1,00,000
Solution 35
Average Profit = Rs. 1,50,000
Capital Employed = 3,00,000+2,00,000 = Rs. 5,00,000
Normal Rate of Return = 20%
Normal Profit = Rs. 1,00,000
Super Profit = 1,50,000-1,00,000 = Rs. 50,000
Normal Rate of Return = 20%
Goodwill = 50,000*100/20 = Rs. 2,50,000
Solution 36
Average Profit = Rs. 8,00,000
Capital Employed = Assets-External Liabilities
= 80,00,000-14,40,000
= Rs. 65,60,000
Normal Rate of Return = 10%
Normal Profit = Rs. 6,54,000
Super Profit = Rs. 1,44,000
Capitalization of Super Profit:
Super Profit = Rs. 1,44,000
Normal Rate of Return = 10%
Goodwill = Rs. 14,40,000
Super Profit Method:
Super Profit = Rs. 1,44,000
No. of Years Purchase = 3
Goodwill = Rs. 4,32,000
Solution 37
i) Average Profit = 2,40,000/3 = Rs. 80,000
No. of Years Purchase = 3
Goodwill = 80,0000*3 = Rs. 2,40,000
ii) Capital Employed = 7,00,000-1,00,000 = Rs. 6,00,000
Normal Rate of Return = 10%
Normal Profit = Rs. 60,000
Super Profit = Rs. 20,000
No. of Years Purchase = 3
Goodwill = Rs. 60,000
iii) Super Profit = Rs. 20,000
Normal Rate of Return = 10%
Goodwill = 20,000*100/10 = Rs. 2,00,000
iv) Adjusted Average Profit = Rs. 80,000
Normal Rate of Return = 10%
Capitalized Value = Rs. 8,00,000
Actual Capital Employed = Rs. 6,00,000
Goodwill = 8,00,000-6,00,000 = Rs. 2,00,000
So, these were the Class 12 goodwill TS Grewal solutions 2024-25. If you have any doubts about any solution, you can ask that in the comment section.
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