Question

Q.21 A Firm earns annual Profit of 25,000/- the rate of Normal return is 10 %. The Assets of firm is worth 3,00,000/- and liabilities 1,25,000/- Find out the value of goodwill on the basis of two years purchase of super Profit. 12th class account numerical​

Answer 1

Answer:

capital employed= total assets - total liabilities

300000 - 125000 = 175000₹

normal profit = capital employed× Normal rate of return/100

= 175000×10/100

=17500₹

hence

super profit= average profit - normal profit

= 25000 - 17500

= 7500₹

so,

goodwill = super profit × number of years purchase

= 7500 × 2

= 15000₹