The average capital employed of a firm is ₹ 4,00,000 and the normal rate of return is 15%. The average profit of the firm is ₹ 80,000 per annum. If the remuneration of the partners is estimated to be ₹ 10,000 per annum, then on the basis of two years purchase of super-profit, the value of the goodwill will be ______.

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The average capital employed of a firm is ₹ 4,00,000 and the normal rate of return is 15%. The average profit of the firm is ₹ 80,000 per annum. If the remuneration of the partners is estimated to be ₹ 10,000 per annum, then on the basis of two years purchase of super-profit, the value of the goodwill will be ₹ 20,000. Explanation: Given: Average Capital Employed = ₹ 4,00,000 Normal Rate of Return (NRR) = 15% Average Profit = ₹ 80,000 Partner’s Remuneration = ₹ 10,000 Normal Profit = Capital Employed xx"NRR"/100 = 4,00,000 xx5/100 = ₹ 60,000 Adjusted Average Profit = 80,000 − 10,000 = ₹ 70,000 Super Profit = Adjusted Average Profit − Normal Profit = 70,000 − 60,000 = ₹ 10,000 Goodwill = Super Profit $\times$ 2 = 10,000 $\times$ 2 = ₹ 20,000

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