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
Answer (1)
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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