The average profit of a business over the last five years was ₹ 60,000. The normal yield on capital invested in such a business is estimated at 10% p.a. Capital invested in the business is ₹ 5,00,000. The amount of goodwill, if it is based on 3 year’s purchase of the last 5 years’ super profits will be:
The average profit of a business over the last five years was ₹ 60,000. The normal yield on capital invested in such a business is estimated at 10% p.a. Capital invested in the business is ₹ 5,00,000. The amount of goodwill, if it is based on 3 year’s purchase of the last 5 years’ super profits will be:
a) ₹ 1,00,000
b) ₹ 1,80,000
c) ₹ 30,000
d) ₹ 1,50,000
Anurag Pathak Changed status to publish April 16, 2023
Ans – c)
Explanation:-
Normal Profit = Capital Employed * Normal Rate of Return
Normal Profit = 5,00,000 * 10%
Normal Profit = ₹ 50,000
Super profit = Average Profit – Normal Profit
Super Profit = ₹ 60,000 – ₹ 50,000
Supre Profit = ₹ 10,000
Goodwill = Super Profit * 3 year’s purchase
Goodwill = 10,000 * 3
Goodwill = ₹ 30,000
Anurag Pathak Changed status to publish April 16, 2023
