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LoginA business earned average profits of Rs 6,00,000 diring the last few years. The normal rate of profits in the similar type of business is 10%. The total value of assets and liabilities of the business were Rs 22,00,000 and Rs 5,60,000 respectively.
Calculate value of goodwill of the firm by super profit methof if the goodwill is valuced at 2(1)/(2) years' purchase of super profits.
Class 12 Accounts in Class 12 3 years ago
`=Rs 4,36,000xx2.5=Rs10,90,000.`
Working notes:
1. Normal Profit = Capital Employed or NET Assets `xx` Normal RATE of Return/100
`=Rs 16,40,000^(**)xx10//100=Rs1,64,000.`
`"*"Net` Assets = ASSET - Labilities = Rs 22,00,000-Rs 5,60,000 = Rs 16,40,000.
2. Super Profit = AVERAGE Profit - Normal Profit
= Rs 6,00,000- Rs 1,64,000= Rs 4,36,000.
Posted on 04 Dec 2021, this text provides information on Class 12 related to Accounts in Class 12. Please note that while accuracy is prioritized, the data presented might not be entirely correct or up-to-date. This information is offered for general knowledge and informational purposes only, and should not be considered as a substitute for professional advice.
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