The Following infromation relates to a partnership firm :
(a) Profits for the last five years :
`{:(2012,"Rs. 80,000",2015,"Rs. 1,50,000"),(2013,"Rs. 1,00,00",2016,"Rs. 2,70,000"),(2014,"Rs. 2,00,000",,):}`
(b) Average Capital Employed is Rs. 5,00,000
(c) Rate of normal profit 20%
Find out the value of goodwill on the basis of :
(i) Three year's purchase of average profits
(ii) Three year's purchase of super profits
(iii) Capitalisation of super profits.

Explanation

Total Profits = Rs. 80,000 + Rs. 1,00,000 + Rs. 2,00,000 + Rs. 1,50,000 + Rs. 2,70,000 = Rs. 8,00,000
Average Profit = Rs. `(8,00,000)/(5) =` Rs. 1,60,000
(i) On the basis of average profits :
Value of goodwill all 3 year's pruchase of average profits :
Rs. 1,60,000 `xx` 3 = Rs. 4,80,000.
(ii) `{:("On the basis of super profits :",,"Rs."),("Average Profit",,"1,60,000"),("Less : Normal Profits 20% of Rs. 5,00,000",,"1,00,000"),("Super Profits",,bar ul("60,000)):}`
Value of goodwill at 3 year's purchase of super profits :
Rs. 60,000 `xx` 3 = Rs. 1,80,000.
(iii) On the basis of capitalisation of super profits :
Goodwill = Super Profit `xx (100)/("Normal Rate of Return")`
= Rs. 60,000 `xx (100)/(20) =` Rs. 3,00,000