A firm earns a profit of Rs.37000 per year. In the same business a 10% return is generally expected. The total assets of the firm are Rs.400000. The value of other liabilities is Rs.90000. Find out the value of goodwill.

Assets-liabilities =capital
400000-90000=31000

Normal profit=capital×10÷100 =310000× 10÷100 = 31000

Average profit = 37000
super profit = Average profit - Normal profit
37000-31000=6000

Goodwill = capitalization of super profits = 6000× 100÷10 = 60000
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