Question

tom 25. A firm goodwill is valued on the basis of 3 years purchase of our
super profit of last 5 years. The projet of last five years are a
I year 20.000 profit. Il year? 25.000 profit, II year? 12.000
IV year 60,000 profit: Vyear 7,000 profit
The capital invested in the form is 100.000 which can cara
of 12% Calculate goodwill.​

Answer 1

Answer:

average profit = 20000+25000+12000+60000+7000/5

= 124000/5

= 24800

normal profit = capital invested × rate of return

normal profit = 100000×12%

=12000

superprofit= average profit -normal profit

super profit = 24800-12000

= 12800

goodwill =super profit ×no. of year purchase

=12800×3

= 38400