Question

A partnership firm earned net profits during the last three years ended 31st March, as follows: 131 2017 - 16,000; 2018 - 22,000; 2019 - 20,000.
The capital investment in the firm throughout the above-mentioned period has been * 80,000. Having regard to the risk involved, 10% is considered to be a fair return on the capital. Calculate value of goodwill on the basis of two years' purchase of average super profit earned during the above- mentioned three years.​

Answer 1

Answer:

answer is 55

I hope this will help you

Answer 2

Answer:

16000

Explanation:

Step 1: Calculation of Normal Profit:

Normal profit= Capital employed * (Normal rate of return/100)

                     = 80000* (15/100)

                     = 12000

Step 2: Calculation of Average Profit:

Average Profit= (17000+20000+23000)/3

                       = 20000

Step 3: Calculation of Super Profit:

Super Profit= Average Profit- Normal Profit  

                   = 20000-12000

                   = 8000

Step 4: Calculation of Goodwill:

Goodwill= 8000* 2

              = 16000