Question : Capital invested in a firm is Rs. 10,00,000. Normal Rate of Return of 10%. The average profits of the firm are Rs. 1,28,000 (after an abnormal loss of Rs. 8,000). Value of Goodwill at two years' purchase of Super Profit will be
Option 1: Rs. 72,000
Option 2: Rs. 40,000
Option 3: Rs. 2,40,000
Option 4: Rs. 1,80,000
Correct Answer: Rs. 72,000
Solution : Answer = Rs 72,000
Actual Average profit = 1,28,000+8000=1,36,000
Normal profit =10,00,000X10%=1,00,000
Super profit =1,36,000-1,00,000=36000
Goodwill =36,000x2= 72,000 Hence, the correct option is 1.
Question : Capital invested in a firm is Rs.5,00,000. Normal rate of return is 10%. Average profits of the firm are 64,000 (after an abnormal loss of Rs.4,000). Value of goodwill at four times the super 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 : Average profits of a firm during the last few years are Rs. 80,000 and the normal rate o return in a similar business is 10%. If the goodwill of the firm is Rs. 1,00,000 at 4 years purchase of super profit, the value of capital employed by the firm is
Question : The goodwill of a firm is Rs.54,000 valued at 4 years purchase of super profit. The capital employed of firm is Rs.2.00,000 and normal rate of return is 10%. The average profit of firm is:
Question : Under the Capitalisation Method of valuation of Goodwill, the formula for calculating goodwill is:
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