Sarthaks Test
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The average net profits expected in the future by XYZ firm are Rs.36,000 per year. The average capital employed in the business by the firm is Rs.2,00,000. The rate of interest expected from capital invested in this class of business is 10%. The remuneration of the partners is estimated to be 6,000 p.a. Find out the value of goodwill on the basis of two years’ purchase of super profit.

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Goodwill = 10,000 x 2

= Rs.20,000

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