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The average net profit expected in future by XYZ firm is ₹ 36,000 per year. Average capital employed in the business by the firm is ₹ 2,00,000. The normal rate of return from capital invested in this class of business in 10%. Remuneration of the partners is estimated to be ₹ 6,000 p.a. Find out the value of goodwill on the basis of two years purchase of super profit. |
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Answer» n:Goodwill = Super PROFIT x Number of Years PURCHASE Normal Profit = EXPECTED Capital Employed x = 2,00,000 x = 20,000 Actual Expected Profit = 36,000-6,000= $30,000 Super Profit = Actual Expected Profit - Normal Expected Profit = 30,000- 20,000 = $10,000 Number of years purchase = 2 Super Profit = $10,000 Goodwill = Super Profit x Number of Years Purchase Goodwill = 10000 x 2 = $20,000 |
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