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Question 12 Chapter 3 of Class 12 Part - 1
12. A business has earned an average profit of Rs. 50,000 and the normal rate of return is 10%. Find out the goodwill by capitalisation of average profit method assuming that the business Owns total assets of Rs. 5,00,000 and external liabilities worth Rs. 1,00,000.
12. Capital Employed or Net Asset of the firm= Total Assets – External Liability
= 5,00,000-1,00,000 = Rs. 4,00,000
| Capitalised Value of the firm= Average profit | X | 100 |
| Normal Rate of Return |
| = 50,000 | X | 100 |
| 10 |
= Rs.5,00,000
Goodwill= Capitalised value of the Firm – Capital Employed
= 5,00,000-4,00,000 = Rs. 1,00,000
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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.
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