Question

A business earned average profit of Rs. 6,00,000 during the last

few years. The normal rate of profit in the similar type of business

is 20%. The total value of assets and liabilities of the business were

Rs. 10,00,000 and Rs. 4,60,000 respectively.

Calculate the value of goodwill of the firm by Super profit method.

Its goodwill is valued at 2



⁄ year’s purchase of super profit.​

Answer 1

Answer:

A business earned average profit of Rs. 6,00,000 during the last

few years. The normal rate of profit in the similar type of business

is 20%. The total value of assets and liabilities of the business were

Rs. 10,00,000 and Rs. 4,60,000 respectively.

Calculate the value of goodwill of the firm by Super profit method.

Its goodwill is valued at 2

⁄ year’s purchase of super profit.

Explanation:

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