Please solve the 11th question with proper explanations.
Dear Student,
The answer is: Option (b), i.e. ₹20,000
Goodwill = Super Profit x No. Of years' purchase
The answer is: Option (b), i.e. ₹20,000
Goodwill = Super Profit x No. Of years' purchase
Super Profit = Average Profit - Normal Profit
Actual average profit = 80,000 - 10,000 = ₹70,000
Normal Profit = Capital employed x Rate of return/100
= 4,00,000 x 15/100 = ₹60,000
Super Profit = 70,000 - 60,000
Super Profit = ₹10,000
Goodwill = 10,000 x 2 = ₹20,000
Regards
Normal Profit = Capital employed x Rate of return/100
= 4,00,000 x 15/100 = ₹60,000
Super Profit = 70,000 - 60,000
Super Profit = ₹10,000
Goodwill = 10,000 x 2 = ₹20,000
Regards