Question

The capital of a firm is Rs. 450000. Normal rate of return in such type of business is 12%. The average
profit of the firon is Rs 60000. Find the value of goodwill with the capitalization method of super profit
method​

Answer 1

Answer:

...........................

Explanation:

4000

Answer 2

Answer:

Given :

• Capital of Firm - 4,50,000

• Normal rate of return - 12%

• Average Profit - 60,000

To Find :

• Value of Goodwill with Capitalisation method of Super profits

Solution :

$\bf\bullet\: Normal \: Profit \: = Capital \times \frac{Normal \: Rate}{100}$

$\to \sf \: Normal \: Profits \: = 450000 \times \frac{12}{100}$

$\to \sf \: \frac{5400000}{100} = 54000$

${\to{\frak {\:normal \: profits = 54000 }}}$

$[/tex]</p><p>[tex]\bf\bullet \: Super \: Profit \: = Average \: profit - Normal \: Profit$

$\to \sf \: 60000 - 54000$

$\sf \to \: 6000$

${\frak{\to{Super \: Profit \: = 6000}}}$

$\bf\bullet \: Goodwill \: = Super\: Profit \times \frac{100}{Normal \: Rate \: of \: return}$

$\sf \to \: 6000 \times \frac{100}{12}$

$\sf \to \: \frac{600000}{12} = 50000$

$\therefore\large\frak{value \: of \: goodwill = 50000}$

Capitalisation Of Super Profits :

• Calculate the Normal profits on capital employed

• Calculate Average profit for past years

• Calculate super profits by deducting Normal profits from average profits

• Multiply the super profits by 100 and divide it by normal rate of return.

• If capital employed is not mention, It is equal To the assets - liabilities.