Question

44. On 1st April, 2021, an existing firm had assets of 7,50,000 including cash of 50,000. The Partners' Capital Account showed a balance of 6,00,000 and reserve constituted the rest. Normal Rate of Return is 10%. Value of Firm's Goodwill is 2,40,000 at 4 years' purchase of Super Profit

(i) Super Profit will be
a 50,000.
b *60,000.
d * 70,000.
© *80,000.
(ii) Average Profit will be
b 1,65,000.
a * 1,25,000.
d * 1,40,000.
c * 1,35,000. ​

Answer 1

Answer:

(i) Super Profit will be

a 50,000.

ii) Average Profit will be

d * 1,40,000.

Explanation:

hope it will help

Answer 2

Answer:

Step 1: Calculation of Capital Employed:

Capital Employed= Total assets- Creditors

                              = 75000-5000

                              = 70000

Step 2: Calculation of Normal Profit:

Normal Profit= Capital Employed* [Normal Rate Of Return/100]

                      = 70000* [20/100]

                      = 14000

Step 3: Calculation of Super Profit from Goodwill:

Super Profit= Goodwill/ Number of year's of purchase

                   = 24000/4

                   = 6000

Step 4: Calculation of Average Profit from Super Profit:

Average Profit= Super Profit+ Normal Profit

                        = 14000+6000

= 20000