please help anybody
.. .. no spamming plz
Answers
Answer: Value of goodwill is Rs. 1,36,000.
Given that,
Capital employed is Rs. 16,00,000 ,
Normal rate of return is 12% ,
Goodwill is valued at 2 years' purchases of Super profit.
We need to calculate the value of goodwill under Super Profit Method.
First,
- Finding the total profit of the last 5 years.
Total Profit = Profits of given number of years - losses, if any.
= 3,56,000 - 70,000 + 3,44,000 + 340,000 + 3,30,000
= Rs. 13,00,000
- Now, finding the average profit:
- Now, Normal profit = Capital employed × Normal rate of return
= 16,00,000 × 12%
= Rs. 1,92,000
- Finding the Super Profit,
= 2,60,000 - 1,92,000
= Rs. 68,000
- Now, calculating the goodwill,
Thus, the value of goodwill (under Super Profit Method) is Rs. 1,36,000.
★Total Profit = 3,30,000 + 3,40,000 + 3,44,000 - 70,000
+ 3,56,000 = 13,00,000.
★Average Profit = Total Profit / Given no. of years
= 13,00,000/5
= 2,60,000.
★Average capital employed = 16,00,000
★Normal rate of return = 12 percent
★Hence,Normal Profit =
= Rs 1,92,000.
★Therefore, Super Profit = Average Profit - Normal Profit
= 2,60,000 - 1,92,000
= Rs 68,000.
★Value of Good will = Super Profit × No. of years purchased
= 68,000 × 2
= Rs 1,36,000.