Question

If, average profit during last few years is $Rs.100000$, NRR is $10$%. Ascertain the value of goodwill by capitalisation of average profit method if total assets are $Rs.1500000$ and liabilities $Rs.680000$.

• A. $Rs.1,00,000$
• B. $Rs.1,80,000$
• C. $Rs.1,10,000$
• D. $Rs.1,05,000$

Answer 1

Answer: (B)

$Rs.1,80,000$

Here, Goodwill = Capitalised value - Net Assets.
Capitalised value = avg profit X 100/ NRR = $1,00,000$ X $100$ / $10$ = $10,00,000$

Net assets = Total asset - Total liabilities = $15,00,000$ - $6,80,000$ = $8,20,000$
therefore,
Goodwill = $10,00,000$ - $8,20,000$ = $1,80,000$