# Question 26 Chapter 3 of USHA Publication 12 Class Part – 1

Question 26 Chapter 3 of +2 Part-1 - USHA Publication 12 Class Part - 1

Question 26 Chapter 3 of USHA Publication 12 Class Part – 1

26. (Capitalisation of S.P./S.P. Method) A business has earned average profits of ₹ 1,00,000 during the last few years and the normal rate of return in similar business is 10%. Find out the value of goodwill by
(i)Capitalisation of super profit method
(ii) Super profit method if the goodwill is valued at 3 year’s purchase of super profit. The asset of the business were ₹ 10,00,000 and its external liabilities ₹ 1,80,000.

## The solution of Question 26 Chapter 3 of USHA Publication 12 Class Part – 1: –

 Capital Employed = Total Assets – Liabilities = 10,00,000 – 1,80,000 = 8,20,000
 Normal Profit = Capital Employed X Normal Rate of Return 100 = 8,20,000 X 10 100 = 82,000
 Super Profit = Average- Normal Profit = 1,00,000 -82,000 = 18,000
 Goodwill = Super Profit X 100 Normal Rate of Return = 18,000 X 100 10 = 1,80,000
 Goodwill = Super profit x No. of year purchase = 18,000 x 3 = 54,000

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