Pls Explain the ans
Dear Student
This is the simple question of calculating goodwill,
We have to calculate the goodwill of the firm firstly by the simple formula of Super profit which is shown below.
Then as per details of the question, We have to multiply the goodwill with PSR of Saurabh to get his share of goodwill.
Please follow the below table step by step and in case of any query please get back to us.
Regards
This is the simple question of calculating goodwill,
We have to calculate the goodwill of the firm firstly by the simple formula of Super profit which is shown below.
Then as per details of the question, We have to multiply the goodwill with PSR of Saurabh to get his share of goodwill.
Please follow the below table step by step and in case of any query please get back to us.
Calculation of Goodwill on the basis of Capitalisation of Super Profit method | |||
Total Assets | 190,000 | ||
Less: Liabilities (Loan + Creditors) | 30,000 | ||
Capital Employed | 160,000 | ||
Normal Profit = Capital employed x normal rate of return | (1,60,000 x 12%) | 19,200 | |
Averge Profit | 30,000 | ||
Super Profit = Average Profit - Normal Profit | 10,800 | ||
Goodwill @ 4 years purchase of Super Profit | (10,800 x 4) | 43,200 | |
Saurabh's share of goodwill | (43,200 x 1/3) | 14,400 |
Regards