Question : The net assets of the firm including fictitious assets of Rs.5,000 are Rs.85,000. The net liabilities of the firm are Rs.30,000. The normal rate of return is 10% and the average profits of the firm are Rs.8,000. Calculate the goodwill as per capitalization of super profits.
Option 1: Rs.20,000
Option 2: Rs.30,000
Option 3: Rs.25,000
Option 4: None of these
Correct Answer: Rs.30,000
Solution : Capitalised value of the firm = Average Profit X 100/Rate of return = Rs.8,000 X 100/10 = Rs.80,000 Net Assets (excluding fictitious assets) - Outside Liabilities = Rs.80,000 (Rs.85,000 - Rs.5,000) - Rs.30,000 = Rs.50,000 Goodwill = Capitalised value - Net assets = Rs.80,000 - Rs.50,000 = Rs.30,000 Hence, the correct option is 2.
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 : Under the Capitalisation Method of valuation of Goodwill, the formula for calculating goodwill is:
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
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:
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