Question : Puneet and Tarun are in the restaurant business having credit balances in their fixed Capital Accounts of Rs. 2,50,000 each. They have credit balances in their Current Accounts of Rs. 30,000 and Rs. 20,000 respectively. The firm does not have any liability. They are regularly earning profits and their average profit for the last 5 years is Rs. 1,00,000. If the normal rate of return is 10%, The value of goodwill by Capitalisation of Average Profit Method is
Option 1: Rs 10,00,000
Option 2: Rs 5,50,000
Option 3: Rs 4,50,000
Option 4: None of these
Correct Answer: Rs 4,50,000
Solution : Answer = Rs 4,50,000
Capital Employed = Rs. 2,50,000+2,50,000+30,000+20,000=5,50,000
Goodwill = Rs.10,00,000- 5,50,000 = Rs 4,50,000.
Hence, the correct option is 3.
