Accountancy, asked by devrajpati1234, 8 hours ago

a firn earns rs 66000 as its annual profit the rate of normal profit being 10% The assets of the firm amount to rs 700000 and liabilii to rs 200000 find out the value of G.W capitalization method​

Answers

Answered by manasbauri058
1

Answer:

(i) 3 Years' purchase of Average Profit method:

Step 1: Calculation of Average Profit:

Average Profit=[(200000-100000)+(180000-100000)+(160000-100000)]/3

= 80000

Step 2: Calculation of Goodwill:

Goodwill= 80000 * 3

= 240000

(ii) 3 Years' purchase of Super Profit method:

Step 1: Calculation of Capital Employed:

Capital Employed= total assets- external liabilities

= 700000-100000

= 600000

Step 2: Calculation of Normal Profit:

Normal Profit= 600000* [10/100]

= 60000

Step 3: Calculation of Average Profit:

Average Profit=[(200000-100000)+(180000-100000)+(160000-100000)]/3

= 80000

Step 4: Calculation of Super Profit:

Super Profit= 80000-60000

= 20000

Step 5: Calculation of goodwill:

Goodwill= 20000 * 3

= 60000

(iii) Capitalisation of Super Profit Method:

Step 1: Calculation of Capital Employed:

Capital Employed= total assets- external liabilities

= 700000-100000

= 600000

Step 2: Calculation of Normal Profit:

Normal Profit= 600000* [10/100]

= 60000

Step 3: Calculation of Average Profit:

Average Profit=[(200000-100000)+(180000-100000)+(160000-100000)]/3

= 80000

Step 4: Calculation of Super Profit:

Super Profit= 80000-60000

= 20000

Step 5: Calculation of goodwill:

Goodwill= Super Profit * [100/Normal Rate of return]

= 20000*[100/10]

= 200000

(iv) Capitalisation of Average Profit method:

Step 1: Calculation of Average Profit:

Average Profit=[(200000-100000)+(180000-100000)+(160000-100000)]/3

= 80000

Step 2: Calculation of capitalised value of profit:

Capitalised value of profit= 80000*[100/10]

= 800000

Step 3: Calculation of Capital Employed:

Capital Employed= total assets- external liabilities

= 700000-100000

= 600000

Step 4: Calculation of goodwill:

Goodwill= 800000-600000

= 200000

Answered by Sauron
4

Explanation:

Solution :

Goodwill = Capitalised Value of Profit - Actual Capital Employed

Actual Capital Employed = Assets - Liabilities

= 7,00,000 - 2,00,000

= 5,00,000

Actual Capital Employed = Rs. 5,00,000

Capitalised Value of Profit = Annual Profit × (100/Rate of Return)

= 66,000 × (100/10)

= 6,60,000

Capitalised Value of Profit = Rs. 6,60,000

Goodwill = Capitalised Value of Profit - Actual Capital Employed

= 6,60,000 - 5,00,000

= 1,60,000

Goodwill = Rs. 1,60,000

Therefore, the value of Goodwill by capitalization method = Rs. 1,60,000

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