Lesson - Valuation of Goodwill
MCQ
1. Following are the factors affecting goodwill except:
(a) Nature of business
(b) Efficiency of management
(d) Technical know how
(d) Location of the customers
2. Weighted average method of calculating goodwill should be followed when:
(a) Profits are uneven
(b) Profits has increasing trend
(c) Profits has decreasing trend
(d) Either ‘b’ or ‘c’
3. Under average profit basis goodwill is calculated by :
(a) No. of years purchased multiplied with average profits
(b) No. of years purchased multiplied with super profits
(c) Summation of the discounted value of expected future benefits
(d) Super profit divided with expected rate of return
4. Under super profit basis goodwill is calculated by :
(a) No. of years purchased multiplied will average profits.
(b) No. of years purchased multiplied with super profits
(c) Summation of the discounted value of expected future benefits
(d) Super profit divided with expected rate of return
5. Under annuity basis goodwill is calculated by :
(a) No. of years purchased multiplied with average profits
(b) No. of years purchased multiplied with super profits
(c) Summation of the discounted value of expected future benefits
(d) Super profit divided with expected rate of return
6. Under capitalization basis goodwill is calculated by :
(a) No. of years purchased multiplied with average profits
(b) No. of years purchased multiplied with super profits
(c) Summation of the discounted value of expected future benefits
(d) Super profit divided with expected rate of return
7. The profits and losses for the last years are 2001-02. Losses 10,000; 2002-03
Losses 2,500; 2003-04 Profits 98,000 & 2004-05 Profits 76,000. The average capital
employed in the business is 2,00,000. The rate of interest expected from capital
invested is 12%. The remuneration of partners is estimated to be 1,000 per month.
Calculate the value of goodwill on the basis of two years purchase of super profits
based on the average of four years.
(a) 9,000
(b) 8,750
MCQ
1. Following are the factors affecting goodwill except:
(a) Nature of business
(b) Efficiency of management
(d) Technical know how
(d) Location of the customers
2. Weighted average method of calculating goodwill should be followed when:
(a) Profits are uneven
(b) Profits has increasing trend
(c) Profits has decreasing trend
(d) Either ‘b’ or ‘c’
3. Under average profit basis goodwill is calculated by :
(a) No. of years purchased multiplied with average profits
(b) No. of years purchased multiplied with super profits
(c) Summation of the discounted value of expected future benefits
(d) Super profit divided with expected rate of return
4. Under super profit basis goodwill is calculated by :
(a) No. of years purchased multiplied will average profits.
(b) No. of years purchased multiplied with super profits
(c) Summation of the discounted value of expected future benefits
(d) Super profit divided with expected rate of return
5. Under annuity basis goodwill is calculated by :
(a) No. of years purchased multiplied with average profits
(b) No. of years purchased multiplied with super profits
(c) Summation of the discounted value of expected future benefits
(d) Super profit divided with expected rate of return
6. Under capitalization basis goodwill is calculated by :
(a) No. of years purchased multiplied with average profits
(b) No. of years purchased multiplied with super profits
(c) Summation of the discounted value of expected future benefits
(d) Super profit divided with expected rate of return
7. The profits and losses for the last years are 2001-02. Losses 10,000; 2002-03
Losses 2,500; 2003-04 Profits 98,000 & 2004-05 Profits 76,000. The average capital
employed in the business is 2,00,000. The rate of interest expected from capital
invested is 12%. The remuneration of partners is estimated to be 1,000 per month.
Calculate the value of goodwill on the basis of two years purchase of super profits
based on the average of four years.
(a) 9,000
(b) 8,750
