Question

Question 4
The following particulars are available in respect of the business carried on by Rathore
1. Capital Invested
1,50,000
2 Trading Results:
2018
Profit 40,000
2019
Profit 36,000
2020
Loss 6,000
2021
Profit 50,000
3. Market Rate of interest on investment
10%
4 Rate of risk return on capital invested in business
2%
5. Remuneration from alternative employment of
Rs. 6,000 per
the proprietor (if not engaged in business).
annum
You are required to compute the value of goodwill on the basis of 5 years' purchase of super profit of the
business calculated on the average profits of the last four years,​

Answer 1

The following particulars are available in respect of the business carried on by a partnership firm:

Trading Results:

Year I Loss Rs. 10,000

Year Il Loss Rs. 12,000

Year Ill Profit Rs. 1,50,000

Year IV Profit Rs. 1,20,000

The value of goodwill on the basis of 5 years purchase of the average profit of the business

3,10,000