Calculate the value of goodwill at 2 years purchase when capital employed is Rs 2,50,000. Average profit Rs 30,000 and normal rate of return is 10%.
Answers
Answered by
4
Answer:
Explanation:
super profit = avg profit - normal profit
normal profit = (cap employed x nrr)/100
= 2,50,000 x 10 / 100
= 25,000
super profit = 30,000 - 25000
= 5000
goodwill = super profit x no. of years' purchase
= 5000 x 2
= 10000
Answered by
9
Explanation:
Solution :
★ Goodwill = Super Profit × No. of years Purchases
• Normal Profit = Capital Employed × (Normal Rate of Return/100)
= 2,50,000 × (10/100)
= 25,000
Normal Profit = 25,000
• Super Profit = Average Profit - Normal Profit
= 30,000 - 25,000
= 5,000
Super Profit = 5,000
★ Goodwill = Super Profit × No. of years Purchases
= 5,000 × 2
= 10,000
Goodwill = Rs. 10,000
Therefore,
The value of Goodwill = Rs. 10,000
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