Average Profit Methods

From the figures given below, calculate goodwill according to the capitalisation of Average Profits Method : (i) Actual Average Profits = Rs. 72,000 (ii) Normal Rate of Return = 10% (iii) Assets = Rs. 9,70,000 (iv) Liabilities = Rs. 4,00,000

(Capitalisation Method). A firm earned Rs. 60,000 as profit, the normal rate of return being 10% . Assets of the firm are Rs. 7,20,000 (excluding goodwill) and Liabilities are Rs. 2,40,000. Find the value of goodwill by Capitalisation of Average Profit Method.

Puneet and Trun are in restaurant business having credit balance in their fixed Capital Account as Rs. 2,50,000 each. They have credit balances in their Current Accounts of Rs. 30,000 and Rs. 20,000 respectively. The firm does not have any liability. They are regularly earning profits and their average profit fo last 5 years is Rs. 1,00,000. If the normal rate of return is 10% find the value of goodwill by Capitalisation of Average Profit Method.

A firm earns profit of Rs. 5,00,000. Normal Rate of Return in a Similar type of business is 10% . The value of total assets (excluding goodwill) and total outsiders' liabilities as on the date of goodwill are Rs. 55,00,000 and Rs. 14,00,000 respectively. Calculate value of goodwill according to Capitalisation of Super Profit Method as well as Capitalisation of Average Profit Method.