Question

average profit of a firm is 9000.firm's capital is 60000 and normal return on business is expected at 10%.find out goodwill by capitalisation method​

Answer 1

Answer:

average profit = 9,000

capitalised value = average profit×100/rate of return

= 9000×100/10

= 90,000

goodwill = capitalised value - net assets

= 90,000 - 60,000

= 30,000