Question

Find out normal profit if capital employed is Rs. 10,00,000 and normal rate of return is 12%.​

Answer 1

Answer:

Calculation of goodwill under capitalization basis:

Capital employed = Rs. 100000

Normal rate of return = 15%

Average profit = Rs. 20000

Normal value of business = Average profit/ Normal rate of return

Normal value of business = Rs. 20000/ 15%

Normal value of business = Rs. 133333

Goodwill = Normal value of business - Capital employed

Goodwill = Rs. (133333 - 100000) = Rs. 33333

Answer 2

$\huge\mathbb\colorbox{black}{\color{red}{Question}}$

• $\sf\purple{To \: find \: the \: profit}$

$\huge\mathbb\colorbox{black}{\color{red}{Answer}}$

• $\sf\purple{1,20,000}$

$\small\mathbb\colorbox{black}{\color{red}{Solution \: For \: The \: Correct \: Answer}}$

$\small\mathbb\colorbox{black}{\color{lime}{Formula}}$

$\small\bold{Normal \: Profit \: =Capital \: Employed ×}$

$\small\bold{Normal \: Rate/100}$

• => 10,00,000×12/100
• => 10,000×12
• =>1,20,000 (Profit)