(9) GOODWILL ਸ਼ਾਖ
(1) Average Profit
Method
(2) Super Profit Method
G3) Capitalization
Method
Super
Profit Method:
A firm's Average Profits
are Rs. 70,000. It includes on abnormal profit of Rs. 5,000. Capital Invested
in the business is Rs. 5, 50,000 and the normal rate of Return is 10°%o.
Calculate Goodwill at four times the Super Profit.
Solution: Calculation of Actual Average Profit:
Average Profit = 70,000
Less Abnormal Profit = 5,000
Actual Average Profit = 65,000
Normal Profit = Capital Invested x Normal
Rate of Return
100
= 5, 50,000 x 10 = 55,000
100
Super Profit = Actual Average Profit
- Normal Profit
= 65,000 — 55,000 = 10,000
Goodwill = Super Profit x Number of
years purchased
= 10,000 x 4 = 40,000
Capitalization Method
Calculate Goodwill
According to capitalisation of Average Profit Method:
Actual Average Profit = 72,000
Normal Rate of Return = 10%
Assets = 9, 70,000
Liabilities = 4, 00,000
Capitalised value of Average Profit =
Average Profit x 100
Normal Rate of return
= 72,000 x 100 = 7, 20,000
10
Capital Employed = Assets —
liabilities
Net Assets = 9, 70,000 — 4, 00,000 =
5, 70,000
Goodwill = Capitalised value of
Average Profit — Net Assets
= 7, 20,000 —5, 70,000 = 1, 50,000
