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Capital employed = Rs.6,00,000
Average profit = Rs.1,05,000
Normal rate of return = 15%
Value of goodwill under Capitalisation method will be Rs.________
  • a)
    1,00,000
  • b)
    90,000
  • c)
    1,10,000
  • d)
    None
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
Capital employed = Rs.6,00,000Average profit = Rs.1,05,000Normal rate ...
Calculation of Goodwill using Capitalisation Method:

Step 1: Calculation of Super Profit

Super Profit = Average Profit - Normal Profit

= Rs.1,05,000 - [(15/100) x Rs.6,00,000]

= Rs.1,05,000 - Rs.90,000

= Rs.15,000

Step 2: Calculation of Goodwill

Goodwill = Super Profit x 100 / Normal Rate of Return

= Rs.15,000 x 100 / 15

= Rs.1,00,000

Therefore, the value of goodwill under the Capitalisation method will be Rs.1,00,000.
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Community Answer
Capital employed = Rs.6,00,000Average profit = Rs.1,05,000Normal rate ...
Average profit *100/normal rate of return105000*100/15=700000
Goodwill=700000-600000=100000
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Capital employed = Rs.6,00,000Average profit = Rs.1,05,000Normal rate of return = 15%Value of goodwill under Capitalisation method will be Rs.________a)1,00,000b)90,000c)1,10,000d)NoneCorrect answer is option 'A'. Can you explain this answer?
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Capital employed = Rs.6,00,000Average profit = Rs.1,05,000Normal rate of return = 15%Value of goodwill under Capitalisation method will be Rs.________a)1,00,000b)90,000c)1,10,000d)NoneCorrect answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Capital employed = Rs.6,00,000Average profit = Rs.1,05,000Normal rate of return = 15%Value of goodwill under Capitalisation method will be Rs.________a)1,00,000b)90,000c)1,10,000d)NoneCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Capital employed = Rs.6,00,000Average profit = Rs.1,05,000Normal rate of return = 15%Value of goodwill under Capitalisation method will be Rs.________a)1,00,000b)90,000c)1,10,000d)NoneCorrect answer is option 'A'. Can you explain this answer?.
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