Q. 10. A firm earned profits of 380,000, 1,00,000, 31,20,000 and 31,80,000
during 2010-11, 2011-12, 2012-13 and 2013-14 respectively. The firm has capital
investment of 5,00,000. A fair rate of return on investment is 15% p.a. Calculate
goodwill of the firm based on three years' purchase of average super profits of last four
years.
Answers
Answered by
2
Answer:
total profits=380000+100000+3120000+3180000=6780000
average profit=6780000/4=1695000
normal profit=capital invested×NRR/100
=500000×15/100=75000
super profit=actual average profit-normal profit
=1695000-75000=1620000
therefore,value of goodwill=super profit×no.of year's of purchase
=1620000×3=4860000
Similar questions