A Business Earned An Average Profit of ₹ 8,00,000 During the Last Few Years :- Goodwill - Bzziii.com
A business earned an average profit of ₹ 8,00,000 during the last few years. The normal rate of profit in the similar type of business is 10%
A business earned an average profit of ₹ 8,00,000 during the last few years. The normal rate of profit in the similar type of business is 10%. The total value of assets and liabilities of the business were ₹ 22,00,000 and ₹ 5,60,000 respectively. Calculate the value of goodwill of the firm by super profit method if it is valued at 2`\frac{1}{2}` years' purchase of super profits.
Average profit = Rs.8,00,000
Capital Employed = Total assets - Outside Liabilities
= Rs. (22,00,000 - 5,60,000)
= Rs. 16,40,000
Normal Profit = Capital Employed x `"Normal Rate"/100`
Average profit = Rs.8,00,000
Capital Employed = Total assets - Outside Liabilities
= Rs. (22,00,000 - 5,60,000)
= Rs. 16,40,000
Normal Profit = Capital Employed x `"Normal Rate"/100`
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