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 earned a profit of Rs.1.50,000. Calculate the value of goodwill of the firm assuming that the normal
rate of return is 20%?
(Ans : Rs. 2,50.000)​

Answer 1

Answer

Step 1: Calculation of Capital Employed:

Capital employed= Total Capital Employed

= 300000+ 200000

= 500000

Step 2: Calculation of Normal Profit:

Normal Profit= 500000 * [20/100]

= 100000

Step 3: Calculation of Average Profit:

Average Profit= 150000

Step 4: Calculation of Super Profit:

Super Profit= 150000- 100000

= 50000

Step 5: Calculation of Goodwill:

Goodwill= Super profit* [100/Normal Rate of return]

= 50000 * [100/20]

= 250000

HOPE IT HELP YOU

Answer 2

Explanation:

Solution :

★ Goodwill = Super Profit × (100/Normal Rate of Return)

• Capital Employed = Rajan's Capital + Rajani's Capital

= 3.00,000 + 2,00.000

= 5,00,000

Capital Employed = Rs. 5,00,000

• Normal Profit = Capital Employed × (Normal Rate of Return/100)

= 5,00,000 × (20/100)

= 1,00,000

Normal Profit = Rs. 1,00,000

• Super Profit = Average Profit - Normal Profit

= 1.50,000 - 1,00,000

= 50,000

Super Profit = Rs. 50,000

★ Goodwill = Super Profit × (100/Normal Rate of Return)

= 50,000 × (100/20)

= 2,50,000

Goodwill = Rs. 2,50,000

Therefore, the value of Goodwill of the firm will be Rs. 2,50,000