26 :- A firm earned an average profit of Rs 3,00,000 during the last few years. The normal rate of return of the industry is 15%. The assets of the business were Rs 17,00,000 and its liabilities were Rs 2,00,000.
Calculate the goodwill of the firm by capitalisation of average profit.
Solution:- Total capitalized value of the firm as per average profit
Total capitalized of the firm = Average profit/ Normal rate of return
= 3,00,000 x 100/15
= Rs 20,00,000
Calculation of Goodwill of the firm
Goodwill = Total capitalized value of the firm – Capital employed
= 20,00,000 – (17,00,000 – 2,00,000)
= 20,00,000 – 15,00,000
= Rs 5,00,000