16. The profits earned by a business over the last 5 years are as follows ₹12,000; ₹13,000; ₹14,000: ₹18,000 and ₹2,000 (loss). Based on 2 years purchase of the last 5 years profits, value of Goodwill will be:
a) ₹23,600
b) ₹22,000
c) ₹1,10,000
d) ₹1,18,000
17. The goodwill of a firm is valued at 3 years’ purchase of the average profits of last 3 years. The profits of the last three years were: First year: ₹4,00,000 (including an abnormal gain of ₹50,000), Second year: ₹5,00,000 (after charging an abnormal loss of ₹1,00,000), Third year: ₹2,50,000. The average profit for calculating Goodwill would be:
a) ₹2,00,000
b) ₹3,00,000
c) ₹4,00,000
d) ₹3,50,000
18. Followings are the profits of the firm for the last 3 years: First Year: ₹40,000 including profits on sale of a land ₹5,000, Second year: ₹50,000 including ₹10,000 loss on sale of Machinery, Third year: ₹45,000 excluding ₹5,000 payable for insurance premium. Average profits for computing the value of goodwill of the firm would be:
a) ₹30,000
b) ₹35,000
c) ₹40,000
d) ₹45,000
19. Weighted average profit method of calculating goodwill is used when:
a) Profits are not equal
b) Profits show a trend
c) Profits are fluctuating
d) None of the above
20. Value of Hidden Goodwill is calculated using:
a) Average Profit Method
b) Super Profit Method
c) Decision of the partners
d) Net worth of the firm
More questions will be added from time to time.
Class 12 Accountancy MCQs Valuation of Goodwill - Answers
- c) Both Assertion and Reason are correct
- d) ₹1,25,000
- c) ₹10,00,000
- c) Goodwill ₹3,40,000
- b) Goodwill ₹1,02,000
- b) ₹22,000
- d) ₹1,80,000
- d) ₹15,000
- a) True
- d) ₹1,00,000
- c) Both Assertion(A) and Reason (R) are true and Reason(R) is the correct explanation of Assertion(A)
- d)₹6,00,000
- a) ₹10,00,000
- c) ₹60,000
- d) All of the above
- c) ₹1,10,000
- c) ₹4,00,000
- d) ₹45,000
- b) Profits show a trend
- d) Net worth of the firm
Goodwill – Meaning and Valuation