the capital invested in a business is 40000 the normal profit expected in a similar business is 10% per annum the actual average profit of last five year is 8000 calculate the value of goodwill if it calculated at 3 years purchase of super profit.
Answers
Answered by
1
Answer:
Normal profit 40000 × 10%=4000
Super profit 8000-4000 =1000
Goodwill 4000×3 =12000
Answered by
6
Answer:
The value of Goodwill = ₹ 12,000
Explanation:
Solution :
★ Goodwill = Super Profit x No. of year's purchase
• Normal Profit = Capital Employed x (Normal Rate of Return/100)
= 40,000 × (10/100)
= 4,000
Normal Profit = 4,000
• Super Profit = Average profit – Normal Profit
= 8,000 - 4,000
= 4,000
Super Profit = 4,000
★ Goodwill = Super Profit x No. of year's purchase
= 4,000 × 3
= 12,000
Goodwill = ₹ 12,000
Therefore, the value of Goodwill = ₹ 12,000.
Similar questions