Question

Capital of a firm is 800000 which earns
7.5% profit .Average profit of the firm is & 900000.
find the value of goodwill on the basis of
capitalisation method of super profit​

Answer 1

Answer:

Rs. 1,120,000

Explanation:

STEP 1:

CALCULATE NORMAL PROFIT:

Normal profit =Capital employed ×Normal rate of return

STEP 2:

WRITE DOWN THE VALUE OF AVERAGE PROFIT

STEP 3:

CALCULATE SUPER PROFIT:

SUPER PROFIT = AVERAGE PROFIT -NORMAL PROFIT

STEP 4:

CAPITALIZATION OF SUPER PROFIT =SUPER PROFIT÷ NORMAL RATE OF RETURN ×100