the profit and losses for the previous years are 2015 profit ₹ 10,000 2016 loss ₹ 17,000 2017 profit ₹ 17,000 2018 profit ₹ 75,000. The average capital employed in the business is ₹ 2,00,000. The rate of interest expected from capital invested is 10%. The remuneration from alternative employment of the proprietor ₹ 6,000 p.a. Calculate the value of goodwill on the basis of 2 years purchases of super profits based on average of 3 years.
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Average profit of past 3 years :-
-17000+17000+75000/3
=25000
Capital employed = 2,00,000
Normal Rate of Return = 10%
Normal profit = 2,00,000 × 10%
= 20,000
Super profit = 25,000-20,000
= 5,000
Goodwill=5,000×3
=15,000
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