Question

3. The goodwill of a firm is 54,000 valued at 4 years purchase of super profit. The capital employed of
firm is 2,00,000 and normal rate of return is 10%. The average profit of firm is:
(a) 23,500
(6) 33,500
(c) 20,000
(d) 24,500
​

Answer 1

Answer:

Ans is 20000

Explanation:

Full salutation

1st step

find out actual average profit = total profit/no of year purchase

actual average profit = 54000/4

= 13500

2nd step

find out normal profit

Normal profit = (capital employed X normal rate of return) /100

=(200000 X 10) /100

=20000

3ed step

find out super profit

super profit = actual average profit - normal profit

= 13500 - 20000

= -6500

4th step

calculation of goodwill

goodwill = super profit X number of years purchase

= -6500 X 4

= -26000

Goodwill never negative so 26000 is correct goodwill

Answer 2

Answer:

The reply is (b) 33,500.

Explanation:

From the above question,

They have given :

The system for calculating the high-quality earnings is:

Super income = Actual income - Normal profit

To locate the true profit, we can use the formula:

Actual income = Normal fee of return x Capital employed

Actual income = 10% x 2,00,000 = 20,000

To discover the cost of the wonderful profit, we can use the formula:

Super earnings = Goodwill / Number of years of purchase

54,000 = Super earnings x 4

Super earnings = 13,500

Therefore, the common earnings of the company is:

Average earnings = Actual income + Super profit

Average earnings = 20,000 + 13,500

Average earnings = 33,500

Therefore, the reply is (b) 33,500.

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