If average capital employed in a firm is ₹8,00,000, average of actual profits is ₹1,80,000 and normal rate of return is10%, then value of goodwill as per capitalization of average profits is: (A) ₹10,00,000 (B) ₹18,00,000 (C) ₹80,00,000 (D) ₹78,20,000
Answers
Answered by
82
Answer:
Option (A) : ₹ 10,00,000
Explanation:
Solution :
★ Goodwill = Capitalised Value of Profit - Capital Employed
- Normal Rate of Return = 10 %
• Capitalised Value of Profit = Average Profit × (100/Normal Rate of Return)
= 1,80,000 × (100/10)
= 18,00,000
Capitalised Value of Profit = ₹ 18,00,000
- Capital Employed = ₹ 8,00,000
★ Goodwill = Capitalised Value of Profit - Capital Employed
= 18,00,000 - 8,00,000
= 10,00,000
Goodwill = ₹ 10,00,000
Therefore, Option : (A) ₹ 10,00,000
Value of Goodwill as per capitalization of Average profits is ₹ 10,00,000
Answered by
4
Answer:
(A) 10.00,000
Explanation:
Actual profit = 1,80,000
Normal rate = 10%
Now,
Capitalised value of Avg. profit =
Avg Profit * 100/Normal rate of return
1,80,000*100/10
= 18,00,000
Goodwill = 10,00,000
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