Question

capiat of x, y and z firm is 4,00,000 and expected rate of return is 12 % last three year profit are 100,000, 110,000 and 100,000 respectively.compute the value of goodwill two times of super profit on the basis of suitable profit method.​

Answer 1

Answer:

180000

Explanation:

Step 1: Calculation of Capital Employed:

Capital Employed= Assets- External Liabilities

= 1000000- 180000

= 820000

Step 2: Calculation of Capitalised value of Profit:

Capitalised Value of Profit= Profit * [100/rate of return]

= 100000 * [100/10]

= 1000000

Step 3: Calculation of Goodwill:

Goodwill= Capitalised value of profit- Capital employed

= 1000000-820000

= 180000