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Goodwill

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Question

Give the formula for calculation Goodwill by 'Capitalisation of Super Profit Method'.

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Solution

Calculation of Goodwill by Capitalisation of Super Profit Method:
Formula:
Goodwill= [Super Profit/ Normal Rate of Return]* 100

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Q. Average profit of GS &Co. Rs.

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per year. Average capital employed in the business is Rs.

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(i) Super Profit Method at three years' purchase; and
(ii) Capitalisation of Super Profit Method.

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