Question

Average profit of a firm during the last few years is ? 1,50,000, in similar business, the normal rate of
retum is 10% of the capital employed. Calculate the value of goodwill by capitalisation of super profit
method if super profits of the firm are 50,000
CRSE 200
Ans. Value of Good​

Answer 1

Answer:

Goodwill = super profit *100/normal rate of return

= 50000*100/10

= 500000

Answer 2

Explanation:

Average profit = 1,50,000

The normal rate of retum is 10%

Super Profit = 50,000

Capitalisation of super profit method :

Goodwill = Super profits x (100/ Normal Rate of Return) 

=> 50,000 × 100/10

=> 5,00,000

The value of goodwill = 5,00,000

Hence, The value of goodwill = 5,00,000