Question

Average capital employed in the firm 1200000Net trading profits of the firm for the past three years were : * 2,15,200 , 71,81,400 ₹ 2,25,000 . Rate of interest expected from capital having regard to risk involved is 12 % . Fair remuneration to partners for their service 324,000 per annum , not charged to & Loss Account so far . the above information , calculate the value of goodwill by super profit method ( simple weighted . ) assuming 5 years as number of years ' purchase

Answer 1

Answer:

I hope it help you

Explanation:

Step 1: Calculation of Capital Employed:

Capital employed= 1200000

Step 2: Calculation of Normal Profit:

Normal Profit= 1200000 * [10/100]

= 120000

Step 3: Calculation of Average Profit:

Average Profit= 200000

Step 4: Calculation of Super Profit:

Super Profit= 200000- 120000

= 80000

Step 5: Calculation of Goodwill:

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

= 80000 * [100/10]

= 800000