Question
How is goodwill calculated under the super profits method?
Purchase of super profit method: Goodwill is calculated by multiplying the super profit by a certain number of years of purchase.
Goodwill = Super profit × No. of years of purchase
Annuity method: Value of goodwill is calculated by multiplying the super profit with the present value of the annuity.
Goodwill = Super profit × Present value annuity factor
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.
| Particulars | $₹$ |
| Tournament fund on $1^{st}$ April $2018$ | $90,000$ |
| Tournament fund investment on $1^{st}$ April $2018$ | $90,000$ |
| Interest received on tournament fund investment | $9,000$ |
| Donation to tournament fund | $10,000$ |
| Tournament expenses | $60,000$ |
| Balance Sheet of Sundaram Ltd. as on 31.03.2019 | |
| Particulars | Amount ₹ |
| I EQUITY AND LIABILITIES | |
| 1. Shareholders’ Fund | |
| a) Share capital | |
| (i) Equity share capital | 2,50,000 |
| (ii) Preference share capital | 1,50,000 |
| (b) Reserves and surplus | 50,000 |
| 2. Non – Current Liabilities | |
| Long term borrowings | |
| 3. Current liabilities | |
| Trade Payable | 1,50,000 |
| Total | 6,00,000 |
| II ASSETS | |
| 1. Non-Current assets | |
| (a) Fixed Assets | 4,60,000 |
| (b) Non-Current investments | 1 ,00,000 |
| 2. Current assets | |
| Cash and cash equivalents | 40,000 |
| Total | 6,00,000 |