Question

From the following information, calculate value of goodwill of M/s Amit and Summit
(1) At three years' purchase of Average Profil
(u)At the two years' purchase of Super Profit.
(m) On the basis of Capitalisation of Super Proñt.
(iv) On the basis of Capitalisation of Average Profit.
Information:
(a) Average Capital Employed-6,00,000.
(b) Net Pront/Loss of the firm for the past three years: 2016- 2,00,000 (Profit): 2017–31,00,000
(Loss); 2018-?2,30,000 (Profit).
(c) Normal Rate of Return on capital is 12%.
(d) Remuneration of each partner 30,000 per annum to be considered as a charge against
profit.
(e) Assets - 6,50,000; Partners' Capital - 6,00,00
answer the following
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Answer 1

Explanation:

u)At the two years' purchase of Super Profit. ... (iv) On the basis of Capitalisation of Average Profit. ... for the past three years: 2016- 2,00,000 (Profit): 2017 ...