A / B are partners in a firm sharing profit in the ratio 3 : 2 they decided to admit C into partnership for 1/6th share of the future profits. goodwill is valued at 4 items the average super profits for the firm. the firm had assets worth ₹ 20 lakhs and liabilities ₹ 1700000.the normal earning capacity of such firms in expected to be 10 % per annum. the total of actual profits earned during the last three years is ₹ 1 44000. find the value goodwill.
Answers
Answered by
3
Answer:
Capital Employed = Assets - Liabilities = 15 Lacs - 12 Lacs = 3 Lacs
Normal Rate of Return = 10%
Normal Profits = 10% of 3 Lacs = 30,000
Goodwill at 4 times purchase of super profits = 18,000
Super Profits = 18,000/4 = 4,500
Therefore, Average Profits earned by firm are Normal Profits + Super Profits = 30,000 + 4,500 = 34,500
Similar questions