Question

7. The average net profit is (before adjustments) 3,10,000. It includes 3,000 as income on
non-trading investments, the cost of which is * 75,000. Expenses amounting to 4,500 p.a.
are likely to be discontinued in future. The burden of annual taxation is 50% and fair return
is considered to be 8%. The average capital employed (including investments) is 7 19,75,000.
Assuming 5 years' purchase of super profits, find out the value of goodwill.
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Answer 1

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Answer 2

Explanation:

ANSWER

∠COB=90o

In △COB

∠COB+∠OBC+∠OBC=180o

∠OBC=180o−90o−40o

∠OBC=50o

∠OBC=∠ADB     ....[AD || BC]

∠ADB=50o