Valuation of Goodwill

Multiple Choice

Goodwill is an

• Intangible asset

• Fictitious asset

• Fixed asset

• Current asset

Multiple Choice

In case of partnership firms, goodwill is valued at time of

• admission of new partner

• Retirement or death of partner

• change in profit sharing ratio

• all of the above

Multiple Choice

While calculating capital employed the following assets are ignored.

• fixed assets

• floating assets

• current assets

• fictitious assets

Multiple Choice

The present value of the firm’s anticipated excess earnings is

• capital

• Goodwill

• FMP

• super profits

Multiple Choice

Future maintainable profit – normal profit =

• Average capital employed

• Goodwill

• Super profit

• Capital employed

Multiple Choice

While calculating capital employed for ascertainment of goodwill, which one of the following is considered?

• Unrecorded assets and liabilities

• Goodwill

• Fictitious assets

• Investments

Multiple Choice

Average Capital Employed is calculated as

• Capital employed-1/2 of current year profit

• Capital employed-1/2 of past year profit

• Capital employed - 1/2 of Average profits

• Capital employed - current year profit

Multiple Choice

If profits for the last four years was Rs.46,700 Rs. 51,200 Rs.55,000 and Rs.60,000. The average profits are

• Rs.53,225

• Rs.54,000

• Rs. 53,910

• Rs.55,410

Multiple Choice

Interest on investment is_____________ while calculating future maintainable profit.

• Subtracted

• Added

• Multiplied

• Divided

Multiple Choice

Following are the factors affecting goodwill except_______

• Nature of business

• Efficiency of management

• Technical know-how

• Location of the customers

Multiple Choice

Which of the following is/are method(s) of valuation of goodwill ?

• Average profit method

• super profit method

• capitalisation method

• All of the above

Multiple Choice

Which of the following factor(s) affect goodwill

• Nature of business

• Efficiency of management

• Location

• All of the above

Multiple Choice

Find out that goodwill which is accounted for as per Accounting Standard 26

• Purchased goodwill only

• Self generated goodwill only

• both(a) and (b)

• Goodwill brought in by a partner

Multiple Choice

The profits for the last 3 years were- 1st year-4,000 ,IInd year-6,000 and IIIrd year-2,000.Select correct option for goodwill on the basis of 3 years purchase of average profit.

• ₹ 12,500

• ₹ 12,000

• ₹ 13,000

• ₹ 16,000

Multiple Choice

Capital Employed=

• Tangible assets- outside liabilities

• Average profit-Tangible assets

• Super profit -outside liabilities

• None of the above

Multiple Choice

What is meant by Goodwill ?

• The wealth of Business

• Goodwill is an intangible assets when one company acquires the another. It includes reputation, brand etc.

• Goodwill is an tangible fixed assets

• None of the above

Multiple Choice

One company acquires the another company for Rs. 300 Crores for which worth Rs. 210 Crores of assets were received. What is the amount of Goodwill paid by the business ?

• 60 Crores

• 70 Crores

• 80 Crores

• 90 Crores

Multiple Choice

Only _____ Goodwill is recorded in the books of accounts

• Purchased Goodwill

• Self Generated Goodwill

• Both of the Above

• None of the above

Multiple Choice

Set of specific instructions has been designed for recording of goodwill/intangible assets. Which Accounting standard deals which it ?

• Accounting Standard - 10

• Accounting Standard - 25

• Accounting Standard - 26

• None of the above

Multiple Choice

Why the valuation of goodwill is done ?

• To check the value of reputation of business

• At the time of Purchase of another business

• Both

• None

Multiple Choice

Which of the following is the best tool to measure the goodwill of the business

• Making an Inquiry in the Market about the business

• Checking out the name fame in google website

• Making prediction of the future profitability of business based on past performance

• Meta, Instagram, LinkedIn etc popularity

Multiple Choice

Weighted average gives more importance to _____ profits and less importance to _____ profits

• Oldest; Latest

• Latest; Oldest

• Oldest; Oldest

• Latest; Latest

Multiple Choice

Simple average considers giving _____ importance to all profits

• Equal

• Unequal

• Both

• None

Multiple Choice

Weighted average is used when

• All items have same importance

• All items have different importance

• Any of the above

• None of the above

Multiple Choice

Mr. Aryan a well owned businessman wants to record the goodwill in its books of accounts by self calculating it. So that he could attract the investors (like Bank & Shareholders) to invest in his business. The intension of Mr. Aryan is _____ as per accounting standards and such act would lead to _____ of financial statements

• Allowed; Better presentation

• Not Allowed; True & Fair presentation

• Not Allowed; Window dressing

• NOne

Multiple Choice

Goodwill =

• Average Profit * Life of Business

• Average Profit * No. of years of purchase

• Any of the above

• None of the above