Question : Under average profit methods goodwill is calculated as

Option 1: Super profit x No. of years purchases

Option 2: Average profit X No. of years purchases

Option 3: Capital employed X  No. of years purchases

Option 4: Super profit/expected rate of return

Question :

The Formula for Capitalisation of Super Profit Method is:

Option 1: Super Profit X No. of years Purchase

Option 2: Super Profit X 100/Normal rate of return

Option 3: (Super Profit - Normal Profit) 100 / Normal Rate of Return

Option 4: None of the above

Question : Under which method of valuation of goodwill, normal rate of return is not considered?

Option 1: Average profit method

Option 2: Capitalisation method

Option 3: Super profit method

Option 4: All of these

Question : Under the Capitalisation Method of valuation of Goodwill, the formula for calculating goodwill is:

Option 1: Super profits multiplied by the rate of return

Option 2: Average profits multiplied by the rate of return

Option 3: Super profits are divided by the rate of return

Option 4: Average profits divided by the rate of return

Question : From the following information, (i) Capitalisation Method and (ii) at 3 year’s purchase of super profits: What will be the amount of goodwill? 

(i) Total Assets Rs. 10,00,000

(ii) External Liabilities Rs. 1,80,000

(iii) Normal Rate of Return 10%

(iv) Average Net Profit of last five years Rs. 1,00,000

Option 1: By capitalization method Rs 1,80,000, super profit method Rs 54,000

Option 2: By capitalization method Rs 54,000, super profit method Rs 1,80,000

Option 3: By capitalization method Rs 1,80,000, super profit method Rs 1,80,000

Option 4: By capitalization method Rs 54,000, super profit method Rs 54,000