Question

Puneet and Tarun are in restaurant business having credit balances in their fixed Capital Accounts as
*2,50,000 each. They have credit balances in their Current Accounts of 30,000 and 20,000 respectively.
The firm does not have any liability. They are regularly earning profits and their average profit of last
5 years is 1,00,000. If the normal rate of return is 10%, find the value of goodwill by Capitalisation of
Average Profit Method.​

Answer 1

Answer:

Goodwill = Capitalised value of average profit - actual capital employed

Avrage profit = 100000

Normal rate of return = 10%

Capitalised value of average profit =Average profit *100/normal rate of return

= 100000*100/10= 1000000

Actual capital employed= capital account balance + current account balance

= 250000+250000+30000+20000= 550000

Goodwill = 1000000-550000=450000

Answer 2

Answer:

this question with full explanation