the super profits of a firm are 14000 .if the normal rate of return is 7%, calculate the amount of goodwill by super profit capitalization method
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Answered by
1
Answer:
200000
Explanation:
formula of super profit of capitalisation value is super profit multiplied by hundred divided by normal rate of return
Answered by
1
Amount of goodwill = 2,00,000
Explanation:
Given:
Super Profit of firm = 14,000
Normal rate of return = 7% = 7/100 = 0.07
Goodwill = ?
Computation of goodwill under capitalization method:
Amount of Goodwill = Super Profit of firm x (100 / Normal rate of return)
Amount of Goodwill = 14,000 x (100 / 7)
= 14,000 x (100 / 7)
= 2,000 x 100
Amount of goodwill = 2,00,000
Therefore Amount of Goodwill under capitalization method is 2,00,000 .
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