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Average profit of a firm… (Class 12 Accountancy 2026, Q17)

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AccountancyCBSE Class 12 · Board exam 2026, set 67/1/1 · 3 marks · Short answer

CBSE Class 12 Accountancy 2026: question 17

Set in the CBSE Class 12 board exam of 2026, paper 67/1/1, section A, question 17, for 3 marks. Try it first; the hints and our step-by-step solution are below.

Q17 · 3 marks · Short answerReconstitution of a Partnership Firm – Admission of a Partner

Average profit of a firm during the last few years is ₹ 8,00,000. In similar business, the normal rate of return is 10% of the capital employed. Assets of the business were ₹ 60,00,000 and its external liabilities were ₹ 20,00,000.

Calculate the value of goodwill by :

  1. (i)

    Capitalisation of super profits method

    2 marks
  2. (ii)

    Super profit method if the goodwill is valued at four years' purchase of super profits.

    1 mark

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 67/1/1.

Hints

Open one hint at a time and try again before the next.

Hint 1

Capital employed = assets − outside liabilities.

Hint 2

Super profit = average profit − normal profit.

Hint 3

Capitalise super profit at the normal rate for (i); multiply by 4 for (ii).

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Capital employed = assets − external liabilities = 60,00,000 − 20,00,000 = ₹ 40,00,000. Normal profit = 10% = ₹ 4,00,000.

    1 mark

  2. Super profit = 8,00,000 − 4,00,000 = ₹ 4,00,000. (i) Goodwill by capitalisation of super profits = 4,00,000 × 100/10 = ₹ 40,00,000.

    1 mark

  3. (ii) Goodwill at four years' purchase of super profits = 4,00,000 × 4 = ₹ 16,00,000.

    1 mark

Answer: (i) ₹ 40,00,000 (ii) ₹ 16,00,000

Where the marks are

  • Capital employed and normal profit (1 mark)
  • Super profit and goodwill by capitalisation (1 mark)
  • Goodwill at 4 years' purchase (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Reconstitution of a Partnership Firm – Admission of a Partner, one at a time, marked against the answer key and marking points.Back to the full paper2026 board paper, set 67/1/1: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.