37 :- Rohit and Hardik are partners sharing profits and losses equally. They decided to admit Surya as a partner for 1/3 share. For this purpose, the goodwill of the firm is to be valued. From the following information calculate the value of goodwill by :
- Capitalisation of Average profit method.
- Capitalisation of Super Profit Method.
(a) Average Capital Employed : Rs 6,00,000
(b) Normal Rate of Return : 12%
(c) Profit for last three years 2021-22 : Rs 90,000
2022-23 : Rs 80,000
2023-24 : Rs 1,00,000
(d) Assets (Excluding goodwill) : Rs 10,00,000
(e) Liabilties : Rs 4,00,000
Solution :-
CASE 1 :-
Average profit of last three years = 90,000 + 80,000 + 1,00,000/3
= 2,70,000/3 = Rs 90,000
Capitalised value of average profit = Average profit/ Normal rate of return
= 90,000 x 100/12
= Rs 7,50,000
Goodwill = Capitalised value of average profit – Capital employed
= 7,50,000 – 6,00,000
= Rs 1,50,000
CASE 2 :-
Average profit of last three years = 90,000 + 80,000 + 1,00,000/3
= 2,70,000/3 = Rs 90,000
Normal profit = Capital employed x normal rate of return
= 6,00,000 x 12% = Rs 72,000
Super profit = Average profit – Normal profit
= 90,000 – 72,000
= Rs 18,000
Goodwill of the firm = Super profit/ Normal rate of return
= 18,000 x 100/12
= Rs 1,50,000