InterviewSolution
Saved Bookmarks
| 1. |
A business earned an average profit of ₹ 8,00,000 during the last few years. The normal rate of profit in the similar type of business is 10%. The total value of assets and liabilities of the business were ₹ 22,00,000 and ₹ 5,60,000 respectively. Calculate the value of goodwill of the firm by super profit method if it is valued at 2 years purchase of super profits. |
|
Answer» n:Average PROFIT = 8,00,000 Capital Employed = Total ASSETS - outside Liabilities = 22,00,000 - 5, 60, 000 = 16,40, 000 Normal Profit = Capital Employed x = 16, 40, 000 x = 1,64,000 Super Profit = Average Profit - Normal Profit = 8, 00,000 - 1, 64,000 = 6,36,000 Goodwill = Super Profit x No. of Years' Purchase = 6,36,000 x 2.5 = 15, 90, 000 |
|