Accountancy, asked by tirthdesai48, 9 months ago

Tangible Assets of the firm are Rs. 14,00,000 and Outside liabilities are Rs. 4,00,000, Profit of the firm is Rs. 1,50,000 and normal rate of return is 10% Calculate capital employed *
a. Rs. 10,00,000
b. Rs. 1,00,000
c. Rs. 50,000
d. Rs. 20,000

Answers

Answered by dhayana36
1

Answer:

Capitalisation of Super Profit Method:

Step 1: Calculation of Capital Employed:

Capital Employed= 5500000- 1400000

= 4100000

Step 2: Calculation of Normal Profit:

Normal Profit= 4100000 * [10/100]

= 410000

Step 3: Calculation of Average Profit:

Average Profit= 500000

Step 4: Calculation of Super Profit:

Super Profit= 500000- 410000

= 90000

Step 5: Calculation of Goodwill:

Goodwill= 90000 * [100/10]

= 900000

(ii) Capitalisation of Average Profit Method:

Step 1: Calculation of Capitalised value of Profit:

Capitalised value of Profit= Profit * [100/ Normal Rate of return]

= 500000 * [100/10]

= 5000000

Step 2: Calculation of Capital Employed:

Capital Employed= 5500000- 1400000

= 4100000

Step 3: Calculation of Goodwill:

Goodwill= Capitalised value of Profit- Capital Employed

= 5000000- 4100000

= 900000

Answered by sangeeth97sl
2

Answer:

10,00,000 is the Correct Answer

Explanation:

Capital Employed= Total Assets- Current Liabilities
= 1400000- 400000
= 10,00,000

Capital employed, it is also known as funds employed. It is the total amount of capital used for the acquisition of profits by a firm. Capital employed can also be referred to the value of all the assets which the company is used to generate earnings.

Capital Employed = Total Assets – Current Liabilities

Where:

Total Assets are the total book value of all assets.

Current Liabilities are liabilities which are due within a year.

By employing many capital, companies do invest in the long-term future of the company. Capital employed is also helpful since it's used with other financial metrics to determine the return on a company's assets as well as how effective management is at employing capital.


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