A and B were partners in a firm with capitals of Rs 3,00,000

27 :- A and B were partners in a firm with capitals of Rs 3,00,000 and Rs 2,00,000 respectively. The normal rate of return was 20% and the capitalized value of average profit was Rs 7,50,000. Calculate goodwill of the firm by capitalization of average profit method.

Solution:-

Goodwill = Total capitalized value of the firm – Capital employed
                = 7,50,000 – (3,00,000 + 2,00,000)
                = Rs 2,50,000