CA Foundation · Accounting · Partnership and LLP Accounts
The profits of a firm are ₹2,00,000 before adjustments. Closing stock was overvalued by ₹10,000 and an abnormal gain of ₹30,000 is included. Partner's remuneration of ₹20,000 not charged is to be deducted. The firm's capital employed is ₹6,00,000, normal return is 12% and goodwill is 4 times the super profit. Considering only this year's profit, what is the goodwill?
This item is invalid.
- A₹1,12,000Correct
- B₹1,52,000
- C₹32,000
- D₹88,000
Explanation
Adjusted profit = 2,00,000 - 10,000 - 30,000 - 20,000 = 1,40,000. Normal profit = 12% of 6,00,000 = 72,000. Super profit = 68,000... recompute: 1,40,000 - 72,000 = 68,000, goodwill = 68,000 x 4 = 2,72,000 which is not listed, so the intended data differ.
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