WorksheetsGOODWILL: NATURE AND VALUATION
Total questions: 10
Worksheet time: 6mins
1.A BUSINESS WHEREIN DEMAND FOR THE PRODUCTS DEALT IN IS HIGHER THAN SUPPLY,IT WILL LEAD TO LOWER IN CAPITAL REQUIREMENT AND HIGHER PROFIT - WHICH FACTOR OF GOODWILL IS THIS
PAST PERFORMANCE
LONGER ESTABLISHMENT OF BUSINESS
MARKET SITUATION
FAVOURABLE LOCATION
2.EXCESS AMOUNT THAT A FIRM GETS OVER AND ABOVE THE MARKET VALUE OF ASSETS AT THE TIME OF SALE OF ITS BUSINESS IS
RESERVE
SUPER PROFIT
GOODWILL
PROFIT
3.AVERAGE CAPITAL EMPLOYED IN A FIRM IS RS 2,00,000. NORMAL RATE OF RETURN IN THE BUSINESS IS 20% AND THE FIRM'S ARE AVERAGE PROFITS ARE RS 1,60,000. VALUE OF THE GOODWILL BY CAPITALISATION OF SUPER PROFIT METHOD IS
RS - 2,00,000
RS - 4,00,000
RS - 6,00,000
RS - 8,00,000
4.UNDER SUPER PROFIT METHOD , GOODWILL IS CALCULATED BY:
SUPER PROFT - NORMAL PROFIT
SUPER PROFIT × NO OF YEAR'S OF PURCHASE
AVERAGE PROFIT × SUPER PROFIT
AVERAGE PROFIT × NO.OF YEAR'S OF PURCHASE
5.EXCESS OF PROFIT OVER WHAT IS CALLED SUPER PROFIT
ACTUAL,SUPER
SUPER,NORMAL
SUPER ACTUAL
ACTUAL,NORMAL
6.ASSERTION (A) : GOODWILL HAS A VALUE WHICH IS REALISED WHEN BUSINESS IS SOLD.
REASON (R) : GOODWILL IS A FICTITIOUS ASSET SINCE IT IS NORMALLY RELEASED ON SALE OF BUSINESS.
ASSERTION AND REASON ARE CORRECT BUT REASON IS NOT THE CORRECT EXAMINATION OF ASSERTION
ASSERTION(A) AND REASON(R) ARE CORRECT BUT REASON(R) IS THE CORRECT EXAMINATION OF ASSERTION(A)
ASSERTION(A) IS FALSE AND REASON(R) IS TRUE
ASSERTION(A) IS TRUE AND REASON(R)IS FALSE
7.WHAT KIND OF AN ACCOUNT IS A GOODWILL ACCOUNT?
REAL A/C
NOMINAL A/C
PERSONAL A/C
NOT AN A/C
8.TANGIBLE ASSETS OF THE FIRM ARE RS 14,00,000 AND OUTSIDE LIABILITIES ARE 4,00,000.PROFIT OF THE FIRM IS RS 1,50,000 AND NORMAL RATE OF RETURN IS 10%.THE AMOUNT OF CAPITAL EMPLOYED WILL BE
RS 10,00,000
RS 50,000
RS 2,00,000
9.GOODWILL OF THE FIRM IS NOT AFFECTED BY THE:
BETTER CUSTOMER SERVICE
AFTER SALE SERVICES
LOCATION OF THE FIRM
ABNORMAL GAIN(NON RECURRING)
10. IN WHICH OF THE FOLLOWING CASES,VALUATION OF GOODWILL IS NOT REQUIRED:
PREPARATION OF FINAL ACCOUNTS
SALE OF BUSINESS AS A GOING CONCERN
CHANGE IN PSR
DEATH OF A PARTNER
