A firm earns a profit of ₹ 5,00,000. The Normal Rate of Return in a similar type of business is 10%.

The value of total assets (excluding goodwill) and total outsider’s liabilities as on the date of goodwill are ₹ 55,00,000 and ₹ 14,00,000 respectively.

Calculate the value of goodwill according to the Capitalisation of the Super Profit Method as well as the Capitalisation of the Average Profit Method.

[Ans.: Goodwill – ₹ 9,00,000 in both cases.]

Anurag Pathak Changed status to publish April 18, 2023
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