Sarthaks Test
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From the following particulars, calculate value of goodwill of a firm by applying Capitalisation of Average Profit Method: Profits of last five consecutive years ending 31st March are: 2016-Rs.54,000; 2015 – Rs.42,000; 2014 – Rs.39,000; 2013 – Rs.67,000 and 2012- Rs.59,000. Capitalisation rate 20%. Net assets of the firm Rs.2,00,000.

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Goodwill = Capitalised value of profit - Net Assets ( Capital Employed)

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