How the goodwill is valued under the sup...

How the goodwill is valued under the super profits method?

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Under this method, first, super profits are calculated by deducting normal profit from the average profit and then goodwill is calculated by multiplying the super profits by the given number of year's purchase.

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Super Profit Methods

J and K are partners in a firm. Their capitals are: j Rs. 3,00,000 and K Rs. 2,00,000. During the year ended 31st March, 2010 the firm earned a profit of Rs. 1,50,000. Assuming that the normal rate of return is 20% , calculate the value of goodwill of the firm: (i) By Capitalisation Method: and (ii) By Super Profit Method if the goodwill is valued at 2 years' purchase of super profit.

Ajeet and Baljeet are partners in a firm. Their capitals are Rs. 9,00,000 and Rs. 6,00,000 respectively. During the year ended 31st March, 2019 the firm earned a profit of Rs. 4,50,000. Assuming that the normal rate of return is 20% , calculate value of goodwill of the firm: (i) By Capitalisation Method, and (ii) By Super Profit Method if the goodwill is valued at 2 years' purchase of super profit.

A business has earned average profit of Rs. 8,00,000 during the last few years. The normal rate of profit in the similar type of business is 10% .The total value fo assets and liabilities of the business were Rs. 22,00,000 and Rs. 5,60,000 respectively. Calculate the value of goodwill of the firm by super profit method if it is valued at 2 (1)/(2) years' purchase of super profits.

How the goodwill is valued under the super profits method?

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