Total capital employed in the firm is ₹8,00,000, reasonable rate of return is 15% and Profit for the year is ₹12,00,000. The value of goodwill of the firm as per capitalization method would be —
CS CSEET · Business Economics & Fundamentals of Accounting and Auditing · PYQS · June 2013
Total capital employed in the firm is ₹8,00,000, reasonable rate of return is 15% and Profit for the year is ₹12,00,000. The value of goodwill of the firm as per capitalization method would be —
Answer & Explanation:
Correct Answer: Option (C)
Correct answer: (C) ₹72,00,000. Capitalised profit = 12,00,000/0.15 = 80,00,000; goodwill = 80,00,000 − 8,00,000 = 72,00,000.
Topics: Fundamentals of Accounting
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