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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
From the following information, calculate the value of goodwill of the firm by applying the Capitalisation Method: Total Capital of the firm ₹16,00,000; Normal rate of return 10%; Profit for the year ₹2,00,000.
Capitalised Value of the firm = Profit × 100 / Normal Rate of Return = ₹2,00,000 × 100 / 10 = ₹20,00,000.
Goodwill = Capitalised Value – Actual Capital = ₹20,00,000 – ₹16,00,000 = ₹4,00,000.
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 "T.S. Grewal Class 12 Chapter 2 Q.25 - Nature and Valuation of Goodwill", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 2 - Nature and Valuation of Goodwill.
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