Question

Capital employed in a business is 1,50,000 profit are 50,000 and the normal rate of profit is 20%.The amount. Of goodwill as per capitalized method will be

Answer 1

Answer:

goodwill = 1,00,000

Explanation:

total business value = average profit ÷ nrr

TBV = 50,000/20% = 2,50,000

capital employed = 1,50,000

goodwill = TBV - capital employed

= 2,50,000 - 1,50,000 = 1,00,000