Question : A firm earned Rs. 60,000 as profit, the normal rate of return being 10%. Assets of the firm are Rs. 7,20,000 (excluding goodwill) and Liabilities are Rs. 2,40,000. The value of goodwill by Capitalisation of Average Profit Method is
Option 1: Rs 1,20,000
Option 2: RS 60,000
Option 3: Rs 4,80,000
Option 4: Rs 2,40,000
Answer (1)
11th Jan, 2024
Correct Answer: Rs 1,20,000
Solution : Answer = Rs 1,20,000
Total Capitalized Value of the Firm == = Rs. 6,00,000
Net Assets = Total Assets - Liabilities
= Rs. 7,20,000 = Rs. 2,40,000 = Rs. 4,80,000
Goodwill = Total Capitalized Value of the Firm- Net Assets
= Rs. 6,00,000 - Rs. 4,80,000 = Rs. 1,20,000.
Hence, the correct option is 1.
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