Question

The average capital employed in a business is
3,00,000. The normal rate of profit is expected at
8% p.a.. If the actual profit of the firm is 40.000
Calculate the value of goodwill on the basis of two
years purchase of super profit​

Answer 1

Explanation:

Step : 1

Actual profits Given = Rs. 40,000

Step : 2

Normal profit = Capital Employed x Normal rate of retunl

100

= 3,00,000 x 8

100

= Rs. 24,000

Step : 3

Super profit = Actual profits - Normal profit

= 40,000 - 24000

= Rs. 16,000

step : 4

Goodwill =Super profit X no.of years puchase

= 16,000 X 2

= Rs. 32,000