Partnership

Admission

Easy

common

The steps involved in the calculation of goodwill under the super profit method are:

(A) Calculate goodwill by multiplying the super profit by number of years purchase.

(B) Calculate normal profit.

(C) Calculate Average Profit

(D) Calculate super profit.

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(A), (B), (D), (C)

(B), (A), (D), (C)

(C), (B), (D), (A)

✅ Correct Option: 4

Under the Super Profit Method, goodwill calculation follows a logical sequence where each step builds upon the previous one.

The correct sequence is:

(C) Calculate Average Profit → This is the starting point. Average Profit is calculated from the past years' profits of the business.

Average Profit = $\frac{\text{Total Profits of Past Years}}{\text{Number of Years}}$

(B) Calculate Normal Profit → Once we know the average profit, we need to determine what profit is considered "normal" for the industry.

Normal Profit = $\text{Capital Employed} \times \frac{\text{Normal Rate of Return}}{100}$

(D) Calculate Super Profit → This is the excess profit earned above the normal profit.

Super Profit = Average Profit - Normal Profit

(A) Calculate Goodwill → Finally, goodwill is calculated by multiplying the super profit by the number of years' purchase.

Goodwill = Super Profit × Number of Years' Purchase

The sequence (C), (B), (D), (A) represents the logical flow where we first establish what the firm is earning on average, compare it with what it should normally earn, find the excess, and then capitalize that excess to arrive at goodwill.

Correct Answer: Option 4

2025: 24 May Shift 1

Arjun and Vaibhav are partners sharing profits in the ratio of 3:2. They admitted Rahul as a new partner for 1/5 share in the future profits of the firm. The new partner acquired his share from the old partners in the old ratio. Calculate the new profit sharing ratio of Arjun, Vaibhav and Rahul.

2026: 19 May Shift 1

P, Q and S are partners in a firm sharing profit and losses in the ratio of 3:2:1. They agreed to admit R as a partner with 1/6th share in profits of the firm. The following Journal entries were passed on his admission. Arrange them in sequence

(A)

Particulars	Dr. Amount	Cr. Amount
P's Capital A/c Dr.	5,400
Q's Capital A/c Dr.	3,600
S's Capital A/c Dr.	1,800
To Goodwill A/c		10,800
(Being existing goodwill ₹ 10,800 written off in old profit sharing ratio)

(B)

Particulars	Dr. Amount	Cr. Amount
Cash A/c Dr.	64,800
To R's Capital A/c		60,000
To Premium for Goodwill A/c		4,800
(Being R brought capital ₹ 60000 and his share of goodwill Rs. 4800)

(C)

Particulars	Dr. Amount	Cr. Amount
P's Capital A/c Dr.	2,400
Q's Capital A/c Dr.	1,600
S's Capital A/c Dr.	800
To Cash A/c		4,800
(Being share of goodwill withdrawn by old partners )

(D)

Particulars	Dr. Amount	Cr. Amount
Premium for Goodwill A/c Dr.	4,800
To P's Capital A/c		2,400
To Q's Capital A/c		1,600
To S's Capital A/c		800
(Being goodwill brought by R distributed in sacrificing ratio)

Find the correct sequence :

2026: 13 May Shift 2

Kishor and Kunal were partners sharing profits and losses in the ratio of 5:3. On 1st April, 2026 they admitted Kushagra as a new partner and new ratio was decided as 3:2:1. Goodwill of the firm was valued as ₹ 18,00,000. Kushagra couldn't bring any amount for goodwill. The journal entry for the same would be:

2022: 23 Aug Shift 2

What would be the effect of the line "All Debtors are good.

2025: 3 June Shift 2

Ranjan and Anjan were Partners in a firm sharing profits and losses in 3:2. they admitted Sanjan for 1/4 share of profit on 1 Jan 2024.

Goodwill of the firm will be valued at 3 years purchase of average profit of last 4 years which were

2024: Rs. 80,000

2023: Rs. 1,40,000.

2022: Rs. 2,00,000

2021: Rs. 1,60,000

The goodwill of the reconstituted firm will be

2022: 23 Aug Shift 2

From the above calculate amount of Goodwill :

Solution

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