(i) Goodwill = Super Profit x No. of Year Purchase
= Rs. (20,000 x 3)
= Rs. 60,000.
(ii) Goodwill = Super Profit x `"100"/"Normal Rate of Return"`
= Rs. 20,000 x `"10"/"100"`
Average Profit of GS & Co. is ₹ 50,000 Per Year. Average Capital Employed In the Business is ₹ 3,00,000 - Bzziii.com
Average profit of GS & Co. is ₹ 50,000 per year. Average capital employed in the business is ₹ 3,00,000. If the normal rate of return on capital employed is 10%, calculate goodwill of the firm by: (i) Super Profit Method at three years' purchase; and (ii) Capitalisation of Super Profit Method.
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(i) Goodwill = Super Profit x No. of Year Purchase
= Rs. (20,000 x 3)
= Rs. 60,000.
(ii) Goodwill = Super Profit x `"100"/"Normal Rate of Return"`
= Rs. 20,000 x `"10"/"100"`
(i) Goodwill = Super Profit x No. of Year Purchase
= Rs. (20,000 x 3)
= Rs. 60,000.
(ii) Goodwill = Super Profit x `"100"/"Normal Rate of Return"`
= Rs. 20,000 x `"10"/"100"`
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