1.

Average profit of GS & Co. is ₹ 50,000 per year. Average capital employed in the business is ₹ 3,00,000. If the normal rate of return on capital employed is 10%, calculate goodwill of the firm by:(i) Super Profit Method at three years' purchase; and(ii) Capitalisation of Super Profit Method.

Answer» Average profit of GS & Co. is ₹ 50,000 per year. Average capital employed in the business is ₹ 3,00,000. If the normal rate of return on capital employed is 10%, calculate goodwill of the firm by:

(i) Super Profit Method at three years' purchase; and

(ii) Capitalisation of Super Profit Method.


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