Question

15. From the data given below calculate the goodwill of the company by the capitalisation
method:
(a) Normal rate of return applicable to the class of business carried on by the
company 10%.
(b) Adjusted average profits of the preceding 5 years Rs. 30,000.
(c) Net asset employed in the company Rs. 2,00,000.​

Answer 1

Answer:

average profit = 30,000

capitalised value = average profit × 100/ rate of return

capitalised value = 30,000×100/10 = 3,00,000

net assets = 2,00,000

goodwill = capitalised value - net assets

= 3,00,000 - 2,00,000

= 1,00,000

Answer 2

Answer:1 lac

Explanation: capitalised profit

average profit ÷ normal rate of return

30000÷10% = 300000

Goodwill= capitalised profit - capital

= 300000-200000

= 100000