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
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.
Question : A firm earns Rs.2,20,000. The normal rate of return is 10%. The assets of the firm amounted to Rs.22,00,000 and liabilities are Rs.2,00,000. Value of goodwill by capitalisation of actual average profits will be:
Question : From the following information, (i) Capitalisation Method and (ii) at 3 year’s purchase of super profits: What will be the amount of goodwill?
(i) Total Assets Rs. 10,00,000
(ii) External Liabilities Rs. 1,80,000
(iii) Normal Rate of Return
Question :
On 1st April, 2014, a firm had assets of Rs. 1,00,000 excluding stock of Rs. 20,000. Partners’ Capital Accounts showed a balance of Rs. 60,000. The current liabilities were Rs. 10,000 and the balance constituted the reserve. If
Question : M/s Hi-Tech India has assets of Rs. 5,00,000 whereas liabilities are: Partner; Capitals—Rs. 3,50,000, General Reserve—Rs. 60,000 and Sundry Creditors—Rs. 90,000. If the normal rate of return is 10% and the goodwill of the firm is valued at Rs.
Question : Under which method of valuation of goodwill, normal rate of return is not considered?
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