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The cpaitalof the firm of anij and benu is RS 100000 and the market rate of interest is 15%. Annual salary to the partner is 60000 each. The profit for the last three years were 300000 , 360000,420000.goodwill of the firm is to be valued on the basis of two year purchase of the last three years average super profit . Calculate the Goodwill of the firm.?
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The cpaitalof the firm of anij and benu is RS 100000 and the market ra...
Calculation of Goodwill of the Firm
Given data:
- Capital of the firm of Anij and Benu = Rs 100000
- Market rate of interest = 15%
- Annual salary to each partner = Rs 60000
- Profit for the last three years = Rs 300000, Rs 360000, Rs 420000
Step 1: Calculation of Average Super Profit
- Super Profit = Actual Profit - Normal Profit
- Normal Profit = (Capital x Market Rate of Interest) + Annual Salary to Partners
- Normal Profit = (Rs 100000 x 15%) + (Rs 60000 x 2) = Rs 30000 + Rs 120000 = Rs 150000
- Super Profit for the last three years:
- Year 1 = Rs 300000 - Rs 150000 = Rs 150000
- Year 2 = Rs 360000 - Rs 150000 = Rs 210000
- Year 3 = Rs 420000 - Rs 150000 = Rs 270000
- Average Super Profit = (Rs 150000 + Rs 210000 + Rs 270000) / 3 = Rs 210000
Step 2: Calculation of Goodwill
- Goodwill = Average Super Profit x Number of Years Purchase
- Number of Years Purchase = 2
- Goodwill = Rs 210000 x 2 = Rs 420000
Therefore, the Goodwill of the firm of Anij and Benu is Rs 420000.
Explanation:
- Goodwill is an intangible asset that represents the reputation, customer base, brand value, and other non-physical assets of a business.
- It is calculated as the excess of the purchase price over the fair market value of the net assets acquired.
- In this case, the goodwill of the firm of Anij and Benu is valued based on the two-year purchase of the average super profit of the last three years.
- The average super profit is calculated by deducting the normal profit from the actual profit of each year.
- The normal profit is calculated as the sum of interest on capital and annual salary to partners.
- Once the average super profit is determined, it is multiplied by the number of years purchase to arrive at the goodwill value.
Given data:
- Capital of the firm of Anij and Benu = Rs 100000
- Market rate of interest = 15%
- Annual salary to each partner = Rs 60000
- Profit for the last three years = Rs 300000, Rs 360000, Rs 420000
Step 1: Calculation of Average Super Profit
- Super Profit = Actual Profit - Normal Profit
- Normal Profit = (Capital x Market Rate of Interest) + Annual Salary to Partners
- Normal Profit = (Rs 100000 x 15%) + (Rs 60000 x 2) = Rs 30000 + Rs 120000 = Rs 150000
- Super Profit for the last three years:
- Year 1 = Rs 300000 - Rs 150000 = Rs 150000
- Year 2 = Rs 360000 - Rs 150000 = Rs 210000
- Year 3 = Rs 420000 - Rs 150000 = Rs 270000
- Average Super Profit = (Rs 150000 + Rs 210000 + Rs 270000) / 3 = Rs 210000
Step 2: Calculation of Goodwill
- Goodwill = Average Super Profit x Number of Years Purchase
- Number of Years Purchase = 2
- Goodwill = Rs 210000 x 2 = Rs 420000
Therefore, the Goodwill of the firm of Anij and Benu is Rs 420000.
Explanation:
- Goodwill is an intangible asset that represents the reputation, customer base, brand value, and other non-physical assets of a business.
- It is calculated as the excess of the purchase price over the fair market value of the net assets acquired.
- In this case, the goodwill of the firm of Anij and Benu is valued based on the two-year purchase of the average super profit of the last three years.
- The average super profit is calculated by deducting the normal profit from the actual profit of each year.
- The normal profit is calculated as the sum of interest on capital and annual salary to partners.
- Once the average super profit is determined, it is multiplied by the number of years purchase to arrive at the goodwill value.
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The cpaitalof the firm of anij and benu is RS 100000 and the market ra...
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The cpaitalof the firm of anij and benu is RS 100000 and the market rate of interest is 15%. Annual salary to the partner is 60000 each. The profit for the last three years were 300000 , 360000,420000.goodwill of the firm is to be valued on the basis of two year purchase of the last three years average super profit . Calculate the Goodwill of the firm.?
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The cpaitalof the firm of anij and benu is RS 100000 and the market rate of interest is 15%. Annual salary to the partner is 60000 each. The profit for the last three years were 300000 , 360000,420000.goodwill of the firm is to be valued on the basis of two year purchase of the last three years average super profit . Calculate the Goodwill of the firm.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The cpaitalof the firm of anij and benu is RS 100000 and the market rate of interest is 15%. Annual salary to the partner is 60000 each. The profit for the last three years were 300000 , 360000,420000.goodwill of the firm is to be valued on the basis of two year purchase of the last three years average super profit . Calculate the Goodwill of the firm.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The cpaitalof the firm of anij and benu is RS 100000 and the market rate of interest is 15%. Annual salary to the partner is 60000 each. The profit for the last three years were 300000 , 360000,420000.goodwill of the firm is to be valued on the basis of two year purchase of the last three years average super profit . Calculate the Goodwill of the firm.?.
The cpaitalof the firm of anij and benu is RS 100000 and the market rate of interest is 15%. Annual salary to the partner is 60000 each. The profit for the last three years were 300000 , 360000,420000.goodwill of the firm is to be valued on the basis of two year purchase of the last three years average super profit . Calculate the Goodwill of the firm.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The cpaitalof the firm of anij and benu is RS 100000 and the market rate of interest is 15%. Annual salary to the partner is 60000 each. The profit for the last three years were 300000 , 360000,420000.goodwill of the firm is to be valued on the basis of two year purchase of the last three years average super profit . Calculate the Goodwill of the firm.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The cpaitalof the firm of anij and benu is RS 100000 and the market rate of interest is 15%. Annual salary to the partner is 60000 each. The profit for the last three years were 300000 , 360000,420000.goodwill of the firm is to be valued on the basis of two year purchase of the last three years average super profit . Calculate the Goodwill of the firm.?.
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