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Average profit earned by a firm is Rs. 80,000 which includes undervaluation of stock of Rs. 8,000 on an average basis. The capital invested in the business is Rs. 8,00,000 and the normal rate fo return is `8%`.
Calculate goodwill of the firm on the basis of 7 times the super profit.

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The correct Answer is:
Goodwill - Rs. 1,68,000.
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Average profit of GS & Co. is Rs. 50,000 per year. Average capital employed in the business is Rs. 3,00,000. if the normal rate of return on capital employed is 10% , calculate goodwill of the firm by: (i) Super Profit Method at three years' purchase, and (ii) Capitalisation of Super Profit Method.

(Calculation of Average Profit). On 1st April, 2018, a firm had assets of Rs. 3,00,000 including cash of Rs. 5,000. The Partners' Capital Accounts showed a balance of Rs. 2,00,000 and the Reserve constituted the rest. If the normal rate Of return is 10% and the goodwill of the firm is valued at Rs. 2,00,000 at four years' purchase fo super profit, find the average profit of the firm.

Average net profit expected in future by XYZ firm is Rs. 36,000 per year. Average capital employed in the business by the firm is Rs. 2,00,000. The normal rate of return for capital invested in this class of business is 10% . Remuneration of the partners is estimated to be Rs. 6,000 p.a. Calculate the value of goodwill on the basis of two years' purchase of super profit.

TS GREWAL-GOODWILL: NATURE AND VALUATION-Exercise
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  2. Calculate the goodwill of a firm on the basis fo three years' purchase...

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  3. Average profit earned by a firm is Rs. 80,000 which includes underval...

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  4. Gupta and Bose had a firm in which they had invested Rs. 50,000. On an...

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  5. The total capital of the firm of Sakshi, Mehak and Megha is Rs. 1,00,0...

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  6. Rakesh and Ashok earned a profit of Rs. 5,000. They employed capital o...

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  7. Average net profit expected in future by XYZ firm is Rs. 36,000 per ye...

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  8. A partnership firm earned net profits during the last three years ende...

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  9. A partnership firm earned net profits during the past three years as f...

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  10. Ideal Marketing earned an average profit of Rs. 4,00,000 during the la...

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  11. Varuna and Karuna are partners for equal shares. They admit Lata into ...

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  12. A business has earned average profit of Rs. 8,00,000 during the last f...

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  13. Capital of the firm fo Sharma and Verma is Rs. 2,00,000 and the market...

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  14. Supreet and Subham are equal partners. They decide to admit for 1/3rd ...

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  15. On 1st April, 2019, an existing firm had assets of Rs. 75,000 includi...

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  16. Average profit earned by a firm is Rs. 1,00,000 which includes underv...

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  17. Average profit earned by a firm is Rs. 7,50,000 which includes underv...

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  18. Ayub and Amit are partners in a firm and they admit Jaspal into partne...

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  19. From the following information, calculate value of goodwill of the fir...

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  20. A business has earned average profit of 1,00,000 during the last few y...

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