Question

Mr. P is a partner in partnership firm and he received a profile of Rs.8,00,000 from the firm , the amount will be

Answer 1

of goodwill under super profit basis:

Net assets or capital employed = Total assets - Total liabilities

Net assets or capital employed = Rs. (2200000 - 560000) = Rs. 1640000

Average profit = Rs. 800000

Normal profit = Capital employed * rate of interest

Normal profit = Rs. 1640000 * 10% = Rs. 164000

Super profit = Average profit - Normal profit

Super profit = Rs. (800000 - 164000) = Rs. 636000

Goodwill = Super profit * No. of year's purchase

Goodwill = Rs. 636000 * 2.5 years

Goodwil = Rs. 1590000