Partnership Accounts : Goodwill- Concept and Valuation — Important Questions
ICSE · Class 12 · Accountancy
47 important questions from Partnership Accounts : Goodwill- Concept and Valuation for ICSE Class 12 Accountancy, with answers.
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Important Questions from Partnership Accounts : Goodwill- Concept and Valuation
A firm has capital employed of ₹4,00,000 and average profit of ₹72,000. Normal rate of return is 15%. What is the goodwill by capitalisation of super profit method?
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₹80,000
Normal profit = ₹4,00,000 × 15/100 = ₹60,000. Super profit = ₹72,000 - ₹60,000 = ₹12,000. Goodwill = ₹12,000 × 100/15 = ₹80,000.
Goodwill is an intangible asset in a profit-seeking business. Which statement about goodwill is correct?
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It cannot be seen or touched but can be felt
Goodwill is intangible, so it cannot be seen or touched. It still has value in a profit-seeking business.
The goodwill of a business is best described as the value of its _____.
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reputation
Goodwill is the value of the reputation of a firm that helps it earn higher profits.
Which definition of goodwill says that it is the probability that old customers will resort to the old place?
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Lord Eldon
Lord Eldon is credited with that definition of goodwill.
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