Question

Rajan and Rajani are partners in a firm. Their capitals were Rajan Rs.3,00,000. Rajani Rs.2,00,000. During the year 2015 the firm carried a profit of Rs.1,50,000. Calculate the value of goodwill of the firm assuming that the normal rate of return is 20%?

Answer 1

Given :

• Their capitals were Rajan Rs.3,00,000. Rajani Rs.2,00,000.
• During the year 2015 the firm carried a profit of Rs.1,50,000.

To find :

• Calculate the value of goodwill of the firm assuming that the normal rate of return is 20%.

Let's find out the answer :

Rajan's Capital = 3,00,000

Rajni's Capital = 2,00,000

Total capital employed = 5,00,000

Normal rate of return = 20%

$\sf \: Capitalised \: valued = Actual \: profit \sf \: \times\frac{100}{Normal \: rate \: of \: return}$

$= \sf1,50,000 × \frac{100}{20}$

$\sf= 7,50,000$

$\sf \: Goodwill = capitalised \: valued - capital \: employed$

$\sf = 7,50,000 -5,00,000$

$\sf = ₹ \: 2,50,000$

Alternative method :

$\sf \: Normal \: profit = capital \: employed × \frac{Normal \: rate \: of \: return}{100}$

$\implies \sf5,00,000 × \frac{20}{100}$

$\implies \sf₹ \: 1,00,000$

$\sf \: Super \: profit = Actual \: profit - Normal \: profit$

$\sf= 1,50,000 - 1,00,000$

${\boxed{\boxed{{{ \sf ₹ 50,000}}}}}$

Answer 2

Answer :-

• Rajan Capital = 3,00,000
• Rajni Capital = 2,00,000
• Total capital employed = 5,00,000

Normal rate of return = 20%

Capitalised valued = Actual profit = Normal rate of return/100

= 1,50,000 × 100/20

= 7,50,000

Goodwill = capitalised valued - capital employed

= 7,50,000 - 5,00,000

= ₹ 2,50,000

Alternative method :

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

= 5,00,000 × 20/100

= ₹ 1,00,000

Super profit = Actual profit - Normal profit

= 1,50,000 - 1,00,000

= ₹ 50,000