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 : 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 :

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 : 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

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