Treatment of goodwill - Jamb Accounts - Principles of Accounts Past Questions and Answers

Question 1:

• JAMB 1994

The term "accounting period" is used to refer to the

A. Time span during which taxes are paid to the inland revenue board
B. Budget period, usually one year, relied on by the accountant
C. Time span, usually one year, covered by financial statement
D. Period within which debtors are expected to settle accounts

Question 2:

• JAMB 1998

Which of the following is an intangible asset and a measure of a firm's superior earning power?

A. Patent
B. Goodwill
C. Trademark
D. Right issue

Question 3:

• JAMB 1999

Goodwill can be valued in partnership when?

A. A partners make profits
B. Large losses are made
C. A partner retires
D. A new branch is opened

Question 4:

• JAMB 2001

If a partner pays a premium of N500 for 1/5 share of profit, then the total value of goodwill is?

A. N500
B. N2,000
C. N2,500
D. N3,000

Question 5:

• JAMB 2001

Given:
N N
Capital 200,000 total assets 210,000
Liabilities 10,000
210,000 210,000
If the business is purchased at a price including a goodwill of N 20,000, what must have been the purchas price?

A. N190,000
B. N210,000
C. N220,000
D. N230,000