7.
Capital of the firm is 2,00,000. Normal Rate of Return is 10% and average profit of the firm is 30,000. Goodwill
is to be valued at three years purchase of super profits. Find value of Goodwill
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Answer:
Goodwill=Rs.30000
Explanation:
Normal profit = capital employed × normal rate of return
Normal profit = 200000×10%
= 20000
Super profit = Average profit - Normal profit
soper profit = 30000-20000
= 10000
Goodwill = Super profit ×number of years of purchase
goodwill = 10000× 3
= 30000
Goodwill=Rs.30,000
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