Question

Q. n 4 the capital employed of a
business on 31st December 2016
Was Rs 300000 and its profit for the
first last five years where are follows
2011. 24000 2012.30000,2013 33000
2014.42000 2015.51000
calculate the Goodwill on the basis of
three years purchase pop the super
profit is normal rate of return is 10%​

Answer 1

Answer:

To find the value of goodwill by super profit method:-

• Calculate the average profit.
• Calculate the normal profit on the capital employed on the basis of the normal rate of return.
• Calculate the super profit by deducting normal profit from the average profits and
• Calculate goodwill by multiplying the super profit by the given number of years' purchase.

Required solution:-

Total profits:- 24000+30000+33000+42000+51000 =1,80,000

Capital employed=3,00,000

Normal rate of return=10%

No. of years purchased= 3

To find Normal earning of profit:-

$\rm\blue{ \: capital \: employed \times \frac{normal \: rate \: of \: return}{100} }$

$\sf \: normal \: rate \: of \: earnings = 300000 \times \frac{10}{100} = 30000$

To find average profit:-

$\rm\red{ \: average \:profit = \frac{total \: profits \: of \: firm}{no.of \: years} }$

$\sf =>\frac{180000}{5} = 36000$

To find super profit:-

$\rm\green{ \: super\: profit = avg. \: profit - normal \: earnings \: on \: profit}$

$\sf \: =>super \: profit = 36000 - 30000 = 6000$

Valuation of goodwill:-$\rm\purple{ \: super \: profit \times no.of \: years \: purchased }$

$= > 6000 \times 3 = 18000$

$\tt\pink{ \: value \: of \: good \: wil = 18000}$

Answer 2

Answer:

To find the value of goodwill by super profit method:-

Calculate the average profit.

Calculate the normal profit on the capital employed on the basis of the normal rate of return.

Calculate the super profit by deducting normal profit from the average profits and

Calculate goodwill by multiplying the super profit by the given number of years' purchase.

Required solution:-

Total profits:- 24000+30000+33000+42000+51000 =1,80,000

Capital employed=3,00,000

Normal rate of return=10%

No. of years purchased= 3

superprofit=36000−30000=6000

valueofgoodwil=18000