Q.17.A business has earned average profits of Rs. 1,00,000 during the last few years. Find out the value of goodwill by capitalisation method, given that the assets of the business are Rs. 10,00,000 and its external liabilities are Rs. 1,80,000. The normal rate of return is 10%?
SOLUTION
Capitalisation of Super Profit Method
Goodwill=Super Profit Normal rate of Returns×100
Super Profit = Average Profit − Normal Profit
Average Profit = Rs 1,00,000
Normal Profit=Capital Employed×Normal Rate of Return 100
Capital Employed = Assets − Liabilities
= 10,00,000 −1,80,000 = Rs 8,20,000
Normal Profit= 8,20,000×10100=Rs 82,000
Super Profit = 1,00,000 −82,000 = Rs 18,000
∴ Goodwill=18,000010×100=Rs 1,80,000
Super Profit Method
Goodwill = Super Profit × No. of Years of Purchase
= 18,000 × 3 = Rs 54,000
0 Comments