From the following information, calculate the value of goodwill of a firm assuming that goodwill is to be taken at 5 years' purchase of super profit : (i) Average Capital Employed in the business ₹ 10,00,000 (ii) Net pro

Capital Employed = ₹ 10,00,000 Expected Profit = Capital Employed × Expected Rate of Return = ₹ 10,00,000 × 10% = ₹ 1,00,000 Here, total profit of last four years: 1,19,500 + 1,17,000 + 1,22,000 + 1,23,500 = 4,82,000. So, Average Profit = 4,82,000 / 4 = ₹ 1,20,500 Future Maintainable Profit = Average Profit - Fair remuneration of partner = ₹ 1,20,500 - ₹ 8,000 = ₹ 1,12,500 Super Profit = Future Maintainable Profit - Expected Profit = ₹ 1,12,500 - ₹ 1,00,000 = ₹ 12,500 Goodwill = Super Profit × No. of purchasing years' = ₹ 12,500 × 5 = ₹ 62,500