Question 16 Chapter 3 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 16 Chapter 3 of +2- Part-

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.

 

The solution of Question 16 Chapter 3 of +2 Part-1: – 

 

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- 1,80,000
  = 7,00,000

 

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Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

 

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Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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