Question : The goodwill of a firm is Rs.54,000 valued at 4 years purchase of super profit. The capital employed of firm is Rs.2.00,000 and normal rate of return is 10%. The average profit of firm is:
Option 1: Rs.23,500
Option 2: Rs.33,500
Option 3: Rs.20,000
Option 4: Rs.24,500
Correct Answer: Rs.33,500
Solution : Goodwill = Super Profit X Number of years purchase Rs.54,000 = Super Profit X 4 Super profit = Rs.54,000/4 = Rs. 13,500 Normal Profit = Capital employed X Normal rate of return = Rs.2,00,000 X 10% = Rs.20,000 Average Profit = Super Profit + Normal Profit = Rs.13,500 + Rs.20,000 = Rs.33,500. Hence, the correct option is 2.
Question : A firm earned average profit of Rs.45.000. Rate of return on capital employed is 12% p.a. Total capital employed is Rs.4,00,000. Goodwill on the basis of two years purchase of super profit is:
Option 1: Rs.6,000
Option 2: Rs.12,000
Option 3: Rs.18,000
Option 4: None of these
Question : If average capital employed in a firm is Rs.5,00,000, actual profit is Rs.70,000 and normal rate of return is 10%, then super profit is:
Option 1: Rs.40.000
Option 2: Rs.30,000
Option 3: Rs.50,000
Option 4: Rs.20,000
Question : Under the super profit method, goodwill is calculated by
Option 1: Number of years purchase X Average profit
Option 2: Number of years purchase X Super profit
Option 3: super profit/normal rate of return
Option 4: super profit - normal profit
Question : Average profit is Rs.5,00,000. Capital employed is Rs.40,00,000. Normal rate of return is 8%. The value of goodwill on the basis of capitalisation of super profit is:
Option 1: Rs.22,50,000
Option 2: Rs.25,00,000
Option 3: Rs.32,50,000
Option 4: Rs.15,50,000
Question : Average profits of a firm during the last few years are Rs. 80,000 and the normal rate o return in a similar business is 10%. If the goodwill of the firm is Rs. 1,00,000 at 4 years purchase of super profit, the value of capital employed by the firm is
Option 1: Rs 55,000
Option 2: Rs 5,50,000
Option 3: Rs 10,50,000
Option 4: Rs 1,00,000
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