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Ram and Mohan are equal partners in a firm with the following balances in their capital and current A/c's
Ram- capital a/cs 2,50,000 and current a/cs 30,000
Mohan - capital a/cs 2,00,000 and current a/cs 20,000 dr.
the profit earned by the firm for the year ending 31st march, 2022 was 1,00,000 with cost of management 30,000 p.a.
find the value of goodwill of the firm based on capitalisation of super profit if the normal rate of return on capital employed is 10%?
Most Upvoted Answer
Ram and Mohan are equal partners in a firm with the following balances...
Calculation of Goodwill based on Capitalisation of Super Profit:

Step 1: Calculate Super Profit
Super Profit = Actual Profit - Normal Profit
Normal Profit = Total Capital Employed * Normal Rate of Return
Total Capital Employed = Total of Capital A/c + Total of Current A/c
Normal Rate of Return = 10%
Total Capital Employed = (Ram's Capital + Mohan's Capital) + (Ram's Current A/c + Mohan's Current A/c)
Total Capital Employed = (2,50,000 + 2,00,000) + (30,000 + 20,000)
Total Capital Employed = 4,50,000 + 50,000
Total Capital Employed = 5,00,000
Normal Profit = 5,00,000 * 10%
Normal Profit = 50,000
Actual Profit = 1,00,000
Super Profit = 1,00,000 - 50,000
Super Profit = 50,000

Step 2: Capitalise Super Profit to find Goodwill
Goodwill = Super Profit / Normal Rate of Return
Goodwill = 50,000 / 10%
Goodwill = 5,00,000
Therefore, the value of goodwill of the firm based on capitalisation of super profit is Rs. 5,00,000.
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Ram and Mohan are equal partners in a firm with the following balances in their capital and current A/c's Ram- capital a/cs 2,50,000 and current a/cs 30,000Mohan - capital a/cs 2,00,000 and current a/cs 20,000 dr.the profit earned by the firm for the year ending 31st march, 2022 was 1,00,000 with cost of management 30,000 p.a.find the value of goodwill of the firm based on capitalisation of super profit if the normal rate of return on capital employed is 10%?
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Ram and Mohan are equal partners in a firm with the following balances in their capital and current A/c's Ram- capital a/cs 2,50,000 and current a/cs 30,000Mohan - capital a/cs 2,00,000 and current a/cs 20,000 dr.the profit earned by the firm for the year ending 31st march, 2022 was 1,00,000 with cost of management 30,000 p.a.find the value of goodwill of the firm based on capitalisation of super profit if the normal rate of return on capital employed is 10%? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Ram and Mohan are equal partners in a firm with the following balances in their capital and current A/c's Ram- capital a/cs 2,50,000 and current a/cs 30,000Mohan - capital a/cs 2,00,000 and current a/cs 20,000 dr.the profit earned by the firm for the year ending 31st march, 2022 was 1,00,000 with cost of management 30,000 p.a.find the value of goodwill of the firm based on capitalisation of super profit if the normal rate of return on capital employed is 10%? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Ram and Mohan are equal partners in a firm with the following balances in their capital and current A/c's Ram- capital a/cs 2,50,000 and current a/cs 30,000Mohan - capital a/cs 2,00,000 and current a/cs 20,000 dr.the profit earned by the firm for the year ending 31st march, 2022 was 1,00,000 with cost of management 30,000 p.a.find the value of goodwill of the firm based on capitalisation of super profit if the normal rate of return on capital employed is 10%?.
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