. A firm had Assets of Rs 1,50,000 partner’s capital account showed a balance of Rs 1,20,000 and reserves constituted the rest . If normal rate of return is 10% per annum and Goodwill is valued at Rs48,000 at four years purchase of super profits , find the super profit of firm : *
Rs. 18,000
Rs. 6,000
Rs. 12,000
Rs 8,000
which one is Correct.?
Answers
Explanation:
goodwill = super profit × no of year purchase
48000= super profit × 4
super profit = 48000/4
super profit = 12000
Super Profit is Option(c) Rs12000 and average profit is 30000.
Given:
Goodwill = 48000
Capital employed = 150,000
Rate of return = 10%
Time period = 4 yrs
To Find:
Super profit for the firm.
Formula used:
Goodwill = Super Profit × number of years purchase
Explanation:
Goodwill = Super Profit × number of years purchase
48000 = super profit × 4
Super Profit = = 12000
Super Profit = Average Profit - normal profit
normal profit = Capital employed ×
= 150000 ×
= 18000.
Super profit = Average profit - normal profit
12000 = Average profit - 18000
Average profit = 12000 + 18000
= 30000.