(d) 20,000.
15. M/s. Supertech India has assets of 7 5,00,000, whereas Liabilities are:Partners'Capitals—33,50,000, General
Reserve—360,000 and Sundry Creditors—90,000. If Normal Rate of Return is 10% and Goodwill of the
firm is valued at 90,000 at 2 years' purchase of Super Profit. The Average Profit of the firm will be
(b) 86,000.
(d) 23,000.
A firm earned 360.000 as profit the
(a) 46,000.
(c) 1,63,000.
Answers
Goodwill = Super Profit ×× Number of Years' Purchase
Rs. 90,000 = Super profit ×× 2
∴∴ Super Profit = Rs.90,0002Rs.90,0002 = Rs. 45,000
Capital Employed = Assets - Outside Liabilities (Creditors)
= Rs. 5,00,000 - Rs. 90,000 = Rs. 4,10,000
Or
= Partners' Capitals + General Reserve
= Rs. 3,50,000 + Rs. 60,000 = Rs. 4,10,000
Normal Rate of Return = 10%10%
∴∴ Normal Profit = Rs. 4,10,000×10100×10100 = Rs. 41,000
Super profit = Average Profit - Normal Profit
Average Profit = Super Profit + Normal Profit
= Rs. 45,000 + Rs. 41,000 = Rs. 86,000
Explanation:
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Question From class 12 Chapter GOODWILL: NATURE AND VALUATION
(Calculation of Average Profit). <br> M/s Hi-Tech India has assets of Rs. 5,00,000 whereas liabilities are: Partners' Capitals - Rs. 3,50,000, General Reserve - Rs. 60,000 and Sundry Creditors - Rs. 90,000. If normal rate fo return is
and goodwill of the firm is valued at Rs. 90,000 at 2 years' purchase of super profit, find average profit of the firm.
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Text Solution
Solution :
Goodwill = Super Profit
Number of Years' Purchase <br> Rs. 90,000 = Super profit
2 <br>
Super Profit =
= Rs. 45,000 <br> Capital Employed = Assets - Outside Liabilities (Creditors) <br>
= Rs. 5,00,000 - Rs. 90,000 = Rs. 4,10,000 <br>
Or <br>
= Partners' Capitals + General Reserve <br>
= Rs. 3,50,000 + Rs. 60,000 = Rs. 4,10,000 <br> Normal Rate of Return =
<br>
Normal Profit = Rs. 4,10,000
= Rs. 41,000 <br> Super profit = Average Profit - Normal Profit <br> Average Profit = Super Profit + Normal Profit <br>
= Rs. 45,000 + Rs. 41,000 = Rs. 86,000.