Question

2) Find the value of Goodwill from the following information by using Super Profit
Method.
Year
Amount
2016
70,000 (Profit)
2017
65,000 (Profit)
2018
1,15,000 (Profit)
2019
60,000 (Profit)
2020
55,000 (Loss)
D) Capital employed is Rs. 3,20,000
11) Normal Rate of Return is 12%
1) Goodwill is to be valued at 'Three year's purchase of super profit.​

Answer 1

Answer:

Goodwill is to be valued at three years' purchase of four years' average profit. Profits for last four years ending on 31st March of the firm were:

2016 − ₹ 12,000; 2017 − ₹ 18,000; 2018 − ₹ 16,000; 2019 − ₹ 14,000.

Calculate amount of Goodwill.