1.

Capital of the firm of Sharma and Verma is ₹ 2,00,000 and the market rate of interest is 15%. Annual salary to partners is ₹ 12,000 each. The profits for the last three years were ₹ 60,000; ₹ 72,000 and ₹ 84,000. Goodwill is to be valued at 2 years purchase of last 3 years average super profit. Calculate goodwill of the firm.

Answer»

n:Goodwill = SUPER Profit X Number of YEARS PURCHASE Normal Profit               = Capital Investment x                 = 2,00, 000 x = 30, 000  Year      Profit before               Partners' SALARY        Actual Profit               Partners'Salary      -                                 =    after Salary1               60,000               -         24,000            =    36,000 2               72,000               -        24,000            = 48,000 2              84,000                -         24,000            = 60,000  Average Actual Profit after Salary Partners = = =48,000 Super Profit = Average Actual Profit after Salaries - Normal Profit                     = 48, 000 - 30,000                     =18,000 Number of years purchase = 2 Super Profit =18,000 :. Goodwill = Super Profit x Number of Years Purchase :. Goodwill = 18, 000 x 2 =36, 000



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