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Question 12 Chapter 3 of +2-Part-1
12. (Super Profit Method) A firm has total assets of Rs.2,50,000 including cash of Rs.30,000.The creditors are Rs.40,000. Normal rate of return is 10% on capital employed. Goodwill of the firm is valued at Rs.1,20,000 at four years purchase of super profits. Find the average profits.
| Capital Employed | = | Total Assets - Liabilities |
| = | 2,50,000 - 40,000 | |
| = | 2,10,000 |
| Normal Profit | = | Capital Employed | X | Normal Rate of Return |
| 100 | ||||
| = | 2,10,000 | X | 10 | |
| 100 | ||||
| = | 21,000 | |||
| Goodwill of Firm | = | 1,20,000(Given) |
| Super Profit | = | Firm Goodwill |
| Number of years | ||
| = | 1,20,000 | |
| 4 | ||
| = | 30,000 |
| Average Profit | = | Normal Profit + Super Profit |
| = | 21,000 + 30,000 | |
| = | 51,000 |
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "Question 12 Chapter 3 of +2 Part-1 - USHA Publication 12 Class Part - 1", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to USHA Publication +2 Part 1.
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