Question
How is goodwill calculated under the super profits method?
Purchase of super profit method: Goodwill is calculated by multiplying the super profit by a certain number of years of purchase.
Goodwill = Super profit × No. of years of purchase
Annuity method: Value of goodwill is calculated by multiplying the super profit with the present value of the annuity.
Goodwill = Super profit × Present value annuity factor
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.
| Particulars | $₹$ |
| Tournament fund on $1^{st}$ April $2018$ | $90,000$ |
| Tournament fund investment on $1^{st}$ April $2018$ | $90,000$ |
| Interest received on tournament fund investment | $9,000$ |
| Donation to tournament fund | $10,000$ |
| Tournament expenses | $60,000$ |
| Particulars | ₹ |
| Bills receivable at the beginning of the year | 1,40,000 |
| Bills receivable at the end of the year | 2,00,000 |
| Cash received for bills receivable | 3,90,000 |
| Bills receivable dishonoured | 30,000 |
| Balance Sheet (Extract) as on 31.03.2018 | |
| Particulars | Amount ₹ |
| I. EQUITY AND LIABILITIES | |
| 1. Shareholders Funds | |
| (a) Share capital | |
| Equity share capital | 4,00,000 |
| 5% Preference share capital | 1,00,000 |
| (b) Reserves and surplus | |
| General reserve | 2,50,000 |
| Surplus | 1,50,000 |
| 2. Non-current Liabilities | |
| Long-term borrowings (6% Debentures) | 3,00,000 |
| 3. Current liabilities | |
| Trade payables | 1,20,000 |
| provision for tax | 30,000 |
| Total | 13,50,000 |