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Question 16 Chapter 3 of +2-Part-1
16. (Capitalisation Method) A firm earns Rs.1,00,000 as its annual profits, the rate of normal profits being 10%. The assets of the firm amount to Rs.5,00,000 and the liabilities Rs.2,00,000. Find out the value of goodwill by capitalization method.
| Capital Employed | = | Total Assets - Liabilities |
| = | 5,0,0000 - 2,00,000 | |
| = | 3,00,000 |
| Value of business | = | Average Profit | X | 100 |
| Normal Rate of Return | ||||
| = | 1,00,000 | X | 100 | |
| 10 | ||||
| = | 10,00,000 |
| Goodwill | = | Capitalised value of the business - Average Capital Employed |
| = | 10,00,000- 3,00,000 | |
| = | 7,00,000 |
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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.
This guide covers "Question 16 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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