average profit of the firm is rupees 6000 total intangible asset in the form of our 28000 outside live pretty rupees 8000 in the same type of business is the normal rate of return is 20% in the capital employed calculate the value of goodwill by capitalisation of super profit method
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Calculation of goodwill under capitalisation basis:
Capital employed = Rs. 800000
Rate of return = 15%
Average profit = Rs. 1200000
Normal value of business = (Average profit/ Rate of return) * 100
Normal value of business = Rs. (1200000/15) * 100
Normal value of business = Rs. 8000000
Goodwill = Normal value of business - capital employed
Goodwill = Rs. (8000000 - 800000)
Goodwill = Rs. 7200000
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