Question : The profits earned by a business over the last 5 years are as follows: Rs.12,000; Rs.13,000; Rs.14,000; Rs.18,000 and Rs.2,000 (loss). Based on two years purchase of the last 5 years profits, value of goodwill will be:

Option 1: Rs.23,600

Option 2: Rs.22,000

Option 3: Rs.1,10,000

Option 4: Rs.1,18,000

Question : Capital invested in a firm is Rs. 10,00,000. Normal Rate of Return of 10%. The average profits of the firm are Rs. 1,28,000 (after an abnormal loss of Rs. 8,000). Value of Goodwill at  two years' purchase of Super Profit will be

Option 1:  Rs. 72,000

Option 2: Rs. 40,000

Option 3: Rs. 2,40,000

Option 4: Rs. 1,80,000

Question : X and Y are partners sharing profits and losses in the ratio of 3 : 2. They admit Z into partnership with 1/5th share in profits which he acquires equally from X and Y. Z brings in Rs.40,000 as goodwill in cash. Goodwill amount will be credited to -

Option 1: X: Rs.25,000; Y: Rs.15,000

Option 2: X: Rs.4,000; Y: Rs.4,000

Option 3: X: Rs.20,000; Y: Rs.20,000

Option 4: X: Rs.24,000; Y: Rs.16,000

Question : Profits of last three years are Rs.4,20,000, Rs.3,90,000 and Rs.4,50,000. The value of goodwill on the basis of two years purchase of three year average profit is:

Option 1: Rs.3,60,000

Option 2: Rs.12,60,000

Option 3: Rs.8,40,000

Option 4: Rs.4,20,000

Question : B, K and P are partners sharing profits in the ratio of 2:3:4. P died on 31^st March 2012 and for this purpose, goodwill is valued at one and half year’s purchase of average super profits of the last three years.
Profits for the last three years are as under :
First-year Rs. 50,000
Second year Rs. 55,000     
Third year Rs.75,000
The normal profits for similar firms is Rs.45,000.
Choose the correct Journal entry with respect to the treatment of goodwill.

Option 1: Debited B by Rs 6,000 and K debited by Rs 4,000 and credited P’s account by Rs 10,000

Option 2: Debited B by Rs 4,000 and K debited by Rs 6,000 and credited P’s account by Rs 10,000

Option 3: Debited B by Rs 10,000 and credited P By Rs 10,000

Option 4: Debited K by Rs 10,000 and credited P by Rs 10,000