Pleasee solve this accountancy question
Dear Student,
Regards
- Average annual profit = (300000+400000+500000)/3 = 4,00,000
- Average annual profit after partner salary = 4,00,000- 80,000 = 320000
- Normal profit on capital employed = capital employed ×normal rate of return/100
- = 1000000×15/100 = 150000
- Super Profit = Actual Average profit- Normal profit= 320000- 150000= 170000
- Goodwill = super profit × no. of year's purchase= 170000 ×2 = 340000
Regards