Question

firm earned Rs. 60,000 as profit, the normal rate of return being 10%. Assets of the firm are Rs. 7,20,000 and liabilities are Rs. 240, 000. Find out value of goodwill by capitalisation of Average profit method.​

Answer 1

Answer:

1,20,000

Explanation:

1.average profit=60,000

2.capital employed=assets-liabilities

=7,20,000-2,40,000

=4,80,000

3.total capital value of the firm=average profit×100/normal rate

=60,000×100/10

=6,00,000

4.goodwill=total capital value of the firm-capital employed

=6,00,000-4,80,000

=1,20,000