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A business has earned average profit of ₹ 1,00,000 during the last few years. Find out the value of goodwill by capitalisation method, given that the assets of the business are ₹ 10,00,000 and its external liabilities are ₹ 1,80,000. The normal rate of return is 10%. |
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Answer» n:Goodwill = Capitalised Value of AVERAGE Profits - ACTUAL CAPITAL Employed Capitalised Value of Average Profit = Average Profit x = 1, 00,000 x = 10,00, 000 Actual Capital Employed = 10, 00, 000 -1, 80,000 = 8,20, 000 Goodwill = 10, 00, 000 - 8,20, 000 = 1,80,000 |
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