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Question 13 Chapter 3 of Class 12 Part – 1 Usha Publication
13. (Super Profit Method) X and Y have capital of Rs.1,00,000 and Rs.60,000.
The reserve are Rs.50,000 and creditors are Rs.10,000. Normal rate of return expected in this type of business is 10%.
The goodwill is valued Rs.50,000 at two years purchase of super profit. Find out average profits.
| Capital Employed | = | 1,00,000 + 60,000 + 50,000 |
| = | 2,10,000 |
| Normal Profit | = | Capital Employed | X | Normal Rate of Return |
| 100 | ||||
| = | 2,10,000 | X | 10 | |
| 100 | ||||
| = | 21,000 | |||
| Goodwill of Firm | = | 50,000(Given) |
| Super Profit | = | Firm Goodwill |
| Number of years | ||
| = | 50,000 | |
| 2 | ||
| = | 25,000 |
| Average Profit | = | Normal Profit + Super Profit |
| = | 21,000 + 25,000 | |
| = | 46,000 |
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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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