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A firm has received a profit during the last four years RS9000,RS9000,RS11000,RS17000 respectively the firm has capital investment of RS50000. A firm rate of return on investment is 15% p. a calculate goodwill by capitalisation of super profit method and capitalisation of Average profit method?
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A firm has received a profit during the last four years RS9000,RS9000,...
Capitalisation of Super Profit Method:
1. **Calculate Super Profit:**
- Super profit = Average profit - Normal profit
- Average profit = (9000 + 9000 + 11000 + 17000) / 4 = RS11500
- Normal profit = Capital investment * Rate of return = 50000 * 15% = RS7500
- Super profit = RS11500 - RS7500 = RS4000
2. **Goodwill Calculation:**
- Goodwill = Super profit * Capitalisation rate
- Capitalisation rate = 100 / Rate of return = 100 / 15% = 6.67
- Goodwill = RS4000 * 6.67 = RS26680

Capitalisation of Average Profit Method:
1. **Calculate Capitalised Value:**
- Capitalised value = Average profit / Rate of return
- Capitalised value = RS11500 / 15% = RS76667
2. **Calculate Goodwill:**
- Goodwill = Capitalised value - Capital investment
- Goodwill = RS76667 - RS50000 = RS26667
In conclusion, using the capitalisation of super profit method, the goodwill is calculated to be RS26680, whereas using the capitalisation of average profit method, the goodwill is calculated to be RS26667.
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A firm has received a profit during the last four years RS9000,RS9000,RS11000,RS17000 respectively the firm has capital investment of RS50000. A firm rate of return on investment is 15% p. a calculate goodwill by capitalisation of super profit method and capitalisation of Average profit method?
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A firm has received a profit during the last four years RS9000,RS9000,RS11000,RS17000 respectively the firm has capital investment of RS50000. A firm rate of return on investment is 15% p. a calculate goodwill by capitalisation of super profit method and capitalisation of Average profit method? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about A firm has received a profit during the last four years RS9000,RS9000,RS11000,RS17000 respectively the firm has capital investment of RS50000. A firm rate of return on investment is 15% p. a calculate goodwill by capitalisation of super profit method and capitalisation of Average profit method? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A firm has received a profit during the last four years RS9000,RS9000,RS11000,RS17000 respectively the firm has capital investment of RS50000. A firm rate of return on investment is 15% p. a calculate goodwill by capitalisation of super profit method and capitalisation of Average profit method?.
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