The profits and losses for the last years are 2001-02. Loss Rs. 10,000; 2002-03 Loss Rs. 2,500; 2003-04 Profit Rs. 98,000 & 2004-05 Profit Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. Calculate the value of goodwill on the basis of two years purchase of super profits based on the average of four years.

The profits and losses for the last years are 2001-02. Loss Rs. 10,000

1.	The profits and losses for the last years are 2001-02. Loss Rs. 10,000; 2002-03 Loss Rs. 2,500; 2003-04 Profit Rs. 98,000 & 2004-05 Profit Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. Calculate the value of goodwill on the basis of two years purchase of super profits based on the average of four years.
Answer» The profits and losses for the last years are 2001-02. Loss Rs. 10,000; 2002-03 Loss Rs. 2,500; 2003-04 Profit Rs. 98,000 & 2004-05 Profit Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected from capital invested is 12%. Calculate the value of goodwill on the basis of two years purchase of super profits based on the average of four years.

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