Question

21. Average net profit expected in future by xyz hirm is 36.000 per year Average capital employed in
business by the firm is 200,000. The normal rate of return from capital invested in this class of bu
is 10%. Remuneration of the partners is estimated to be 6.000 pa. Calculate the value of goodwill
the basis of two years purchase of super profit​

Answer 1

Answer:

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mithun5387

11.03.2020AccountancySecondary School

+10 pts

Answered

The average net profit expected in future by XYZ firm is ₹ 36,000 per year. Average capital employed in the business by the firm is ₹ 2,00,000. The normal rate of return from capital invested in this class of business in 10%. Remuneration of the partners is estimated to be ₹ 6,000 p.a. Find out the value of goodwill on the basis of two years purchase of super profit.

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Answers

kingofself  Ace

Solution:

Goodwill = Super Profit x Number of Years Purchase

Normal Profit = Expected Capital Employed x 

                     = 2,00,000 x 

                     = 20,000

Actual Expected Profit = 36,000-6,000= $30,000  

Super Profit = Actual Expected Profit - Normal Expected Profit

                   = 30,000- 20,000

                   = $10,000

Number of years purchase = 2

Super Profit = $10,000

Goodwill = Super Profit x Number of Years Purchase Goodwill

              = 10000 x 2 = $20,000