Question

Profit earn during the last 7 years are as follows -

2009 - 20,000 (profit)
2010 - 70,000 (loss)
2011 - 40,000 (loss)
2012 - 2,50,000 (profit)
2013 - 2,70,000 (profit)
2014 - 3,00,000 (profit)
2015 - 3,20,000 (profit)

Capital invested in the firm is rs. 12,00,000. Normal rate of return 10%.
Calculate goodwill on the basis of 2 and half years purchases of average super profit.

Answer 1

1,40,000is the profit gained

1,10,000is the loss so

30000 is the profit 30000/10

=3000

2×6/12

2*1/2

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Answer 2

Answer:

See the attachment for solution, And...

Formulas used to solve the question are mentioned below -

☆ Average profit = Sum total of profit ÷ No.of years

☆ Normal profit

= Capital invested × NRR/100

☆ Super profit = Avg. profit - Normal profit

☆ Goodwill = super profit × No.of years purchases