Question

The total capital of the firm of Sakshi, Mehak and Megha is RS 1,00,000 and the market rate of interest is 15% .The net profits for the last three years were Rs 30,000, Rs 36,000 and Rs. 42,000. Goodwill is to be valued at 2 years purchase of the last 3 years super profits.Calculate the goodwill of the firm.

Answer 1

The total capital of the firm of sakshi mehak and megha

Normal Profit = 1, 00, 000 x 15/100

= 15000

A.P = (30000 + 36000 + 42000)/3

= 108000/3

= 36000

S.P = A.P - N.P

= 36000-15000

= 21000

A.T.Q

Goodwill = 21000 x 2

= 42000