Question

Q.11 The Capital Employed is Rs.
200000/-, Average profit for last 3
years is Rs. 40000/- & the normal
rate of return is 15% Calculate the
goodwill at 4 years purchase of Super
profit?​

Answer 1

Answer:

Explanation:

Capital employed = Rs 2,00,000

Average profit  = Rs 40,000

Normal profit = 15%

Normal profit = Capital employed x normal rate of return = 2,00,000 x 15 %

=> Rs 30,000

Super profit = average profit - normal profit

= 40,000 - 30,000 = Rs 10,000

Goodwill = Super profit x years of purchase

= Rs 10,000 x 4 = Rs 40,000

Answer 2

Goodwill = Rs. 40,000

Explanation:

Given :

• Capital Employed = Rs. 2,00,000/-
• Average profit for last 3 years = Rs. 40,000/-
• The Normal Rate of Return = 15 %
• Number of years purchase = 4 years

To find :

• Calculate the Goodwill

Solution :

Goodwill = Super Profit × No. of years Purchases

Normal Profit = Capital Employed × Normal Rate of Return

⇒ 2,00,000 × 15/100

⇒ 30,000

Normal Profit = Rs. 30,000

Super Profit = Average Profit - Normal Profit

⇒ 40,000 - 30,000

⇒ 10,000

Super Profit = Rs. 10,000

Goodwill = Super Profit × No. of years Purchases

⇒ 10,000 × 4

⇒ 40,000

Goodwill = Rs. 40,000

∴ Goodwill = Rs. 40,000