Question

jai and mishan are partners their capital are rs. 3,00,000 and rs.2,00,000 are respectively . during the year ended 31.03.2021 the firm earned a profit of rs. 1,50,000 . assuming the normal rate of return as 20% calculate the goodwill on the basis of: 1) on the basis of 2 years purchase of super profit . 2)on the basis of capitalisation of super profit. 3)on the basis of capitalisation of average profit​

Answer 1

Answer:

Solution:

(i) Capitalisation Method: <br> Total Capitalised Value of the Firm

<br>

<br> Goodwill = Total Capitalised Value of Business - Capital Employed <br>

= Rs. 7,50,000 - Rs. 5,00,000* = Rs. 2,50,000. <br> *Captial Employed = Capitals of J and K = Rs. 3,00,000 + Rs. 2,00,000 = Rs. 5,00,000. <br> (ii) Super Profit Method: <br> Normal Profit = Capital Employed

Normal Rate of Return /100 <br>

= Rs. 5,00,000

20/100 = Rs. 1,00,000 <br> Average Profit = Rs. 1,50,000 <br> Super Profit = Average Profit - Normal Profit <br>

= Rs. 1,50,000 - Rs. 1,00,000 = Rs. 50,000 <br> Goodwill = Super Profit

Number of Years' Purchase <br>

= Rs. 50,000

2 = Rs. 1,00,000.