Retirement or Death of a partner Test

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Retirement or Death of a partner Test - 13

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Weekly Quiz Competition

Question 1
1 / -0

Factor(s) affecting the value of goodwill is/are _____________.

A
Quality

B
Location or site

C
Competition

D
All the above
Question 2
1 / -0

Goodwill means ___________.

A
the attractive force which brings in customers

B
attachment of customer to a particular business

C
reputation of the firm

D
all of the above

Solution

Goodwill means name and fame of the company. It is also regarded as attractive force which brings in the customers. It is an intangible asset which enhances reputation of the firm. It helps the business to retain the loyal customers by building a good image in the industry.
Question 3
1 / -0

Liquidation expenses paid by the transferee company is debited to _________.

A
General reserve account

B
P/L account

C
Goodwill account

D
None of these

Solution

If the purchasing company is required to pay the expenses of liquidation of the vendor company, the amount should be debited to the goodwill or capital reserve account, as the case may be.
Journal entry for the liquidation expenses paid by the transferee company is :
Goodwill/Capital reserve A/c Dr.
To Cash A/c
Question 4
1 / -0

The excess of purchase consideration over net assets of the transferor company acquired by the transferee company should be recognized as ________ in purchase method.

A
capital reserve

B
general reserve

C
goodwill

D
P&L

Solution

Goodwill.
Goodwill is an intangible asset that arises when one company purchases another for a premium value. Any excess of the amount of purchase consideration over the value of net assets of the transferor company acquired by the transferee company should be recognised as goodwill in the financial statements of transferee company.
Question 5
1 / -0

________ may be defined as the value of the reputation of the firm.

A
Capital

B
Goodwill

C
Drawings

D
Assets

Solution

A business builds up some reputation after it has continued for sometime. If the reputation is good it will come to acquire a fixed "CLIENTELE" . This very valuable asset even if one cannot feel or touch or see is defined as Goodwill.
Question 6
1 / -0

During the reconstitution of partnership firm, _________ is valued.

A
Expenses

B
Incomes

C
Assets

D
Goodwill

Solution

During the reconstitution of a partnership firm, there is a change in the profit-sharing ratio of partners resulting in gain or sacrifice. To give the effect of such change in partners' capital, goodwill is valued and distributed.
Question 7
1 / -0

_______ is an intangible asset which arises on acquisition or is internally generated.

A
Copyrights

B
Goodwill

C
Trademarks

D
Patent

Solution

Fixed Assets are classified in to two categories i.e. tangible assets and intangible assets. Tangible assets are those which can be physically seen and existence of these appears but intangible assets are those which can not be seen physically but it has existence in the business.
Goodwill is considered as intangible assets and this appears in the business by virtue of business growth or this may be acquired while taking over the existing business.
Question 8
1 / -0

Under which of the following methods of capitalization Goodwill = Capitalised Value of Firm(avg profit) - NET Assets(capital employed).

A
Capitalisation of Super Profits Method

B
Capitalisation of NRR

C
Capitalisation of normal Profits Method

D
Capitalisation of Average Profits Method

Solution

Capitalised value of the firm(avg profit) = avg profit / NRR
Net Assets ( capital employed ) = Total assets - total liablilties
Question 9
1 / -0

Under ___________ method Goodwill is valued at the agreed number of years purchase of the average profits of the past few years.

A
Average Profit Method

B
Super Profit Method

C
Capitalization Method

D
None of Above

Solution

In case of purchase of business or reconstitution, the firm may not be able to earn much profit in operations. The Goodwill, therefore, should be calculated by multiplying the past average profits by the number of years during which the anticipated profits are expected to accrue.
Question 10
1 / -0

If, average profit during last few years is $$Rs.100000$$, NRR is $$10$$%. Ascertain the value of goodwill by capitalisation of average profit method if total assets are $$Rs.1500000$$ and liabilities $$Rs.680000$$.

A
$$Rs.1,00,000$$

B
$$Rs.1,80,000$$

C
$$Rs.1,10,000$$

D
$$Rs.1,05,000$$

Solution

Here, Goodwill = Capitalised value - Net Assets.
Capitalised value = avg profit X 100/ NRR = $$1,00,000$$ X $$100$$ / $$10$$ = $$10,00,000$$
Net assets = Total asset - Total liabilities = $$15,00,000$$ - $$6,80,000$$ = $$8,20,000$$
therefore,
Goodwill = $$10,00,000$$ - $$8,20,000$$ = $$1,80,000$$

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Re-Attempt Weekly Quiz Competition

Retirement or Death of a partner Test - 13

Result

Retirement or Death of a partner Test - 13

Score

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Rank

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SHARING IS CARING

Question 1

Quality

Location or site

Competition

All the above

Question 2

the attractive force which brings in customers

attachment of customer to a particular business

reputation of the firm

all of the above

Solution

Question 3

General reserve account

P/L account

Goodwill account

None of these

Solution

Question 4

capital reserve

general reserve

goodwill

P&L

Solution

Question 5

Capital

Goodwill

Drawings

Assets

Solution

Question 6

Expenses

Incomes

Assets

Goodwill

Solution

Question 7

Copyrights

Goodwill

Trademarks

Patent

Solution

Question 8

Capitalisation of Super Profits Method

Capitalisation of NRR

Capitalisation of normal Profits Method

Capitalisation of Average Profits Method

Solution

Question 9

Average Profit Method

Super Profit Method

Capitalization Method

None of Above

Solution

Question 10

$$Rs.1,00,000$$

$$Rs.1,80,000$$

$$Rs.1,10,000$$

$$Rs.1,05,000$$

Solution

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