1.

A business has earned average profits of Rs 1,00,000 during the last few years and the normal rate of return in similar business is 10%. Find out the value of goodwill by : (i) Capitalisation of super profit method. (ii) Super profit method if the good will is valued at 3 years' purchase of super profit. The assets of the business were Rs 10,00,000 and its external liabilities Rs 1,80,000.

Answer»

A business has earned average profits of Rs 1,00,000 during the last few years and the normal rate of return in similar business is 10%. Find out the value of goodwill by :

(i) Capitalisation of super profit method.

(ii) Super profit method if the good will is valued at 3 years' purchase of super profit.

The assets of the business were Rs 10,00,000 and its external liabilities Rs 1,80,000.



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