Total capital employed in ₹800000, reasonable rate of return is 15% and profit for the year is 150000 the value of goodwill of the firm as per capitalisation method would be:
a.) 100000
b.) 200000
c.) 300000
d.) 400000
Answers
Answered by
1
Answer:
Calculation of goodwill under capitalisation basis:
Capital employed = Rs. 800000
Rate of return = 15%
Average profit = Rs. 1500000
Normal value of business = (Average profit/ Rate of return) * 100
Normal value of business = Rs. (1500000/15) * 100
Normal value of business = Rs. 10000000
Goodwill = Normal value of business - capital employed
Goodwill = Rs. (8000000 - 800000)
Goodwill = Rs. 100000
Similar questions