Goodwill valuation and treatment

The ratio in which a partner surrenders his share in favour of a partner is known as:

• New profit-sharing ratio

• Sacrificing Ratio

• Gaining Ratio

• Capital Ratio

In case of change in profit-sharing ratio, the accumulated profits are distributed to the partners in

• new ratio

• old ratio

• sacrificing ratio

• equal ratio

In case of change in profit sharing ratio, the gaining partner must compensate the sacrificing partners by paying the proportional amount of

• capital

• cash

• goodwill

• none of the above

A and B are partners in a firm sharing profits in the ratio of 3 : 2. They decided to share future profits equally. Calculate A’s gain or sacrifice

• 2/10 (sacrifice)

• 5/10 (gain)

• 1/10 (Gain)

• 1/10 (sacrifice)

Sacrificing ratio is the difference between :

• New ratio and old ratio

• Old ratio and new ratio

• New ratio and gaining ratio

• Old ratio and gaining ratio

The ratio in which a partner receives a rise in his share of profits is known as:

• New Ratio

• Sacrificing Ratio

• Capital Ratio

• Gaining Ratio

The goodwill of the firm is NOT affected by:

• Location of the firm

• Reputation of firm

• Better customer service

• None of the above

Which of the following is NOT true in relation to goodwill?

• It is an intangible asset

• It has a realisable value

• It is fictitious assets

• None of the above

When Goodwill is not purchased goodwill account can:

• Never be raised in the book

• Be raised in the book

• Be partially raised in the books

• Be raised as per the agreement of the partners.

The profit earned by a business over the last 5 years are as follows: Rs. 12000 Rs. 13000 Rs. 14000 Rs.18000 and 2000 (loss) based on 2 years purchase of the last 5 years profits, value of goodwill will be .

• Rs. 23,600
• Rs. 22,000
• Rs. 30,000
• Rs. 1,50,000