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Question :

The Formula for Capitalisation of Super Profit Method is:

Option 1: Super Profit X No. of years Purchase

Option 2: Super Profit X 100/Normal rate of return

Option 3: (Super Profit - Normal Profit) 100 / Normal Rate of Return

Option 4: None of the above


Team Careers360 21st Jan, 2024
Answer (1)
Team Careers360 24th Jan, 2024

Correct Answer: Super Profit X 100/Normal rate of return


Solution : Under capitalisation of super profit method:
1. Normal Profit = Capital employed X Normal rate of return
2. Super Profit = Average Profit - Normal Profit
3. Goodwill = Super Profit X 100/Normal rate of return.
Hence, the correct option is 2.

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