average profit earned by a firm is 75,000,which includes undervaluation of stock5,000 on average basis the capital invested in the business is 7,00,000and normal rate of return is7%.calculate Goodwill of the firm of 5times of super profit method.
Answers
Answer:
The average profit earned by a firm is Rs 75,000 which includes undervaluation of stock of Rs 5,000 on an average basis. The capital investd in the business is Rs 7,00,000 and the normal rate of return is 7%. Calculate goodwill of the firm on the basis of 5 times the super profit. = Rs 31,000 × 5 = Rs 1,55,000.
pls follow me and inbox me
Answer:
Adjustment profit= average profit earned by the firm + under valuation stock
= 75000+5000
= 80000
normal profit = capital employed ×normal rate of return
=700000×7/100
= 49000
super profit=average profit-normal profit
= 80000-49000
=31000
goodwill=super profit×no. of year purchase
=31000×5
=155000
Explanation:
please mark me brainlist