1.

A business has earned average profit of ₹ 4,00,000 during the last few years and the normal rate of return in similar business is 10%. Find value of goodwill by:(i) Capitalisation of Super Profit Method, and(ii) Super Profit Method if the goodwill is valued at 3 years' purchase of super profits.Assets of the business were ₹ 40,00,000 and its external liabilities ₹ 7,20,000.

Answer» A business has earned average profit of ₹ 4,00,000 during the last few years and the normal rate of return in similar business is 10%. Find value of goodwill by:

(i) Capitalisation of Super Profit Method, and

(ii) Super Profit Method if the goodwill is valued at 3 years' purchase of super profits.

Assets of the business were ₹ 40,00,000 and its external liabilities ₹ 7,20,000.


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