Accountancy, asked by nitishamaurya90, 16 days ago

The firm of P,Q and R earned Rs.4,00,000 average profits during the last three years. The capital employed in the business was Rs.6,00,000. Normal rate of return of the industry is 8%. Calculate the goodwill of the firm by capitalising the super profits.​

Answers

Answered by Equestriadash
5

Given data:

  • P, Q and R are partners in a firm, earning Rs 4,00,000 as average profit for the last 3 years.
  • The capital employed is Rs 6,00,000.
  • The NRR is 8%.

To find: The goodwill of the firm by capitalizing the super profit.

Answer:

The average profit has already been provided to us, i.e., Rs 4,00,000.

  • Capital employed = Rs 6,00,000
  • NRR = 8%

Normal profit = (Capital × NRR) ÷ 100

Normal profit = (Rs 6,00,000 × 8) ÷ 100

Normal profit = Rs 48,000

Super profit = Average profit = Normal profit

Super profit = Rs 4,00,000 - Rs 48,000

Super profit = Rs 3,52,000

Goodwill = (Super profit × 100) ÷ NRR

Goodwill = (Rs 3,52,000 × 100) ÷ 8

Goodwill = Rs 3,52,00,000 ÷ 8

Goodwill = Rs 44,00,000

Therefore, the goodwill of the firm by capitalization of super profit is Rs 44,00,000.

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