Goodwill Nature and Valuation

26 solved questions from Class 12 Accountancy, each with the full working. Tap any question to see the step-by-step solution.

• 1 What is the primary topic or theoretical principle explored in 'Goodwill Nature and Valuation' (Class 12 ACCOUNTANCY)? medium MCQ Chapter Core Principle
• 2 Which key mechanism or analytical rule is highlighted in 'Goodwill Nature and Valuation'? medium MCQ Key Analytical Mechanism
• 3 What is the primary topic or principle explained in 'Goodwill Nature and Valuation' (Class 12 Accountancy)? medium MCQ Chapter Core Concept
• 4 Which key observation or fact is central to understanding 'Goodwill Nature and Valuation'? medium MCQ Key Fact & Mechanism
• 5 Why is the study of 'Goodwill Nature and Valuation' important for students of Class 12? medium MCQ Learning Significance
• 6 What is a common application or real-world example related to 'Goodwill Nature and Valuation'? medium MCQ Real World Application
• 7 What key takeaway should students retain after completing 'Goodwill Nature and Valuation'? medium MCQ Chapter Summary & Takeaway
• 8 Company X acquires Company Y for ₹350 crores. The fair value of identifiable tangible assets is ₹200 crores, fair value of identifiable intangible assets (excluding goodwill) is ₹30 crores, and liabilities are ₹20 crores. Determine the goodwill arising from the transaction and classify the goodwill as an asset under the Indian GAAP. medium 3 marks Recognition of goodwill and classification
• 9 Which valuation method of goodwill calculates the present value of expected future cash flows generated by the acquired business? medium MCQ 2 marks Valuation methods of goodwill
• 10 A company purchases another business for ₹200 crores. The identifiable net assets (assets minus liabilities) of the acquired business are valued at ₹140 crores. What is the goodwill arising from this transaction? easy 1 mark Goodwill calculation in a business combination
• 11 After a goodwill test, the carrying amount of goodwill is ₹120 crores. The recoverable amount (higher of fair value less costs of disposal and value in use) is found to be ₹90 crores. Calculate the impairment loss for goodwill and explain how it should be presented in the financial statements. hard 5 marks Goodwill impairment test
• 12 Company ABC has goodwill with a carrying amount of ₹120 crores at the beginning of the year. During the year, the following information is obtained for the cash‑generating unit (CGU) to which the goodwill belongs: Fair value less costs of disposal of the CGU = ₹100 crores; Value in use of the CGU = ₹110 crores. Assuming the recoverable amount is the higher of the two, calculate the impairment loss, record the journal entry, and state how the loss should be disclosed in the financial statements. hard 5 marks Impairment testing of goodwill
• 13 A partnership firm expects a normal rate of profit of 10\% on its total capital of ₹50 crores. In the current year the firm earned a profit of ₹9 crores. Using the Super‑Profit method and a capitalization rate of 20\%, calculate the goodwill of the firm. easy 2 marks Super‑profit method of goodwill valuation
• 14 Under Indian GAAP (as per Schedule III of the Companies Act, 2013), how is goodwill classified in the balance sheet, and what is its treatment regarding amortisation? medium 1 mark Classification and amortisation of goodwill
• 15 When goodwill is impaired, which of the following statements regarding its presentation in the financial statements is correct? medium MCQ 2 marks Presentation of goodwill impairment loss
• 16 A partnership firm has a total capital of ₹80 crores and expects a normal rate of profit of 12%. During the year the firm earned a profit of ₹12 crores. Using the super‑profit method with a capitalization rate of 15%, calculate the goodwill of the firm. hard 4 marks Super profit method
• 17 A company acquires a business for ₹300 crores. The identifiable net assets (assets minus liabilities) of the acquired business are valued at ₹200 crores. What goodwill arises from this transaction? easy 1 mark Goodwill calculation
• 18 Company Z has goodwill carrying amount ₹180 crores at year end. The fair value less costs of disposal of the CGU is ₹150 crores and value in use is ₹170 crores. Calculate the impairment loss on goodwill and state the journal entry required to record it. hard 3 marks Goodwill impairment
• 19 Under Schedule III of the Companies Act, 2013, goodwill is shown in the balance sheet under which head? easy MCQ 1 mark Classification of goodwill in balance sheet
• 20 Company P has goodwill of ₹250 crores attached to CGU X. The other assets of CGU X (excluding goodwill) have a carrying amount of ₹400 crores. At year‑end, the fair value less costs of disposal of CGU X is ₹620 crores and its value in use is ₹610 crores. Determine the impairment loss on goodwill, record the journal entry, and explain how the loss should be disclosed in the financial statements. hard 5 marks Goodwill impairment testing under Ind AS
• 21 A partnership firm has a total capital of ₹60 crores and a normal rate of profit of 9%. During the year the firm earned a profit of ₹8 crores. Using the super‑profit method with a capitalization rate of 18%, calculate the goodwill of the firm. medium 3 marks Super‑profit method of goodwill valuation
• 22 Company Q acquires a subsidiary for ₹500 crores. The fair value of identifiable net assets of the subsidiary is ₹350 crores. Expected excess cash flows (over normal return) for the next five years are: Year 1 ₹30 crores, Year 2 ₹35 crores, Year 3 ₹40 crores, Year 4 ₹45 crores, Year 5 ₹50 crores. Discount rate = 10% per annum. Compute the goodwill arising from this acquisition using the present value of excess cash flows method. hard 4 marks Present value method of goodwill valuation
• 23 Company M has a carrying amount of goodwill of ₹220 crores. At the end of the year, the fair value less costs of disposal of its cash‑generating unit (CGU) is ₹200 crores and the value in use of the CGU is ₹210 crores. Calculate the impairment loss on goodwill, record the journal entry, and state how the loss should be disclosed in the financial statements. medium 3 marks Impairment test of goodwill
• 24 Under Schedule III of the Companies Act, 2013, goodwill is shown in the balance sheet under which head? easy MCQ 1 mark Classification of goodwill
• 25 A company acquires another company for ₹480 crores. The fair value of identifiable net assets of the acquired company is ₹300 crores. What is the goodwill arising from this acquisition? easy 2 marks Goodwill calculation in acquisition
• 26 A partnership firm has a total capital of ₹70 crores and expects a normal rate of profit of 11%. During the current year the firm earned a profit of ₹8.5 crores. Using the super‑profit method with a capitalization rate of 17%, calculate the goodwill of the firm. hard 4 marks Partnership goodwill (super‑profit method)