Question

.Capital employed in a business is Rs. 2,00,000. The normal rate of return on capital employed is 15%. During

the year 2002 the firm earned a profit of Rs. 48,000. Calculate goodwill on the basis of 3 years purchase of super

profit? (2​

Answer 1

Answer:

Average profit = 48000

Normal profit = Capital employed × NRR / 100

Normal profit = 200000 × 15 /100

Normal profit = 30000

Super profit = Average profit - Normal profit

Super profit = 48000 - 30000

Super profit = 18000

Goodwill = Super profit × No. of years purchase

Goodwill = 18000 × 3

Goodwill = 54000