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Do It Yourself 1. A firm's profits for the last three years are Rs. 5,00.000: Rs. 4,00,000 and Rs. 6.00.000. Calculate value of firm's goodwill on the basis of four years purchase of the average profits for the last three years. 2. A firm's profits during 2013, 2014, 2015 and 2016 were Rs. 16.000: Rs. 20.000: Rs. 24,000 and Rs. 32.000 respectively. The firm has capital investment of Rs. 1,00.000. A fair rate of return on investment is 18% p.a. Compute goodwill based on three years' purchase of the average super profits for the last four years. 3. Based on the data given in the above question, calculate goodwill by capitalisation of super profits method. Will the amount of goodwill be different if it is computed by capitalisation of average profits? Confirm your answer by numerical verification. 4. Giri and Shanta are partners in a firm sharing profits equally. They admit Kachroo into partnership who, in addition to capital, brings Rs. 20,000 as goodwill for 1/5th share of profits in the firm. What shall be journal entries if: (a) no goodwill appears in the books of the firm. (b) goodwill appears in the books of the firm at Rs. 40,000. se profis? Conim your answer by Do It Yourself 1. A firm's profits for the last three years are Rs. 5,00.000: Rs. 4,00,000 and Rs. 6.00.000. Calculate value of firm's goodwill on the basis of four years purchase of the average profits for the last three years. 2. A firm's profits during 2013, 2014, 2015 and 2016 were Rs. 16.000: Rs. 20.000: Rs. 24,000 and Rs. 32.000 respectively. The firm has capital investment of Rs. 1,00.000. A fair rate of return on investment is 18% p.a. Compute goodwill based on three years' purchase of the average super profits for the last four years. 3. Based on the data given in the above question, calculate goodwill by capitalisation of super profits method. Will the amount of goodwill be different if it is computed by capitalisation of average profits? Confirm your answer by numerical verification. 4. Giri and Shanta are partners in a firm sharing profits equally. They admit Kachroo into partnership who, in addition to capital, brings Rs. 20,000 as goodwill for 1/5th share of profits in the firm. What shall be journal entries if: (a) no goodwill appears in the books of the firm. (b) goodwill appears in the books of the firm at Rs. 40,000. se profis? Conim your answer by