Capitalised profit = Profit :

1.	Capitalised profit = Profit :
Answer» Answer: Step 1: Calculate average estimated profits Step 2: Calculate the capitalised average profits Step 3: Calculate the value of Actual capital EMPLOYED or net assets of the business Step 4: Calculate goodwill by SUBTRACTING the actual capital employed from the capitalised average profit Explanation: NORMAL profit = Capital employed x Normal rate of return / 100 = 5,00,000 x 15 / 100 = 75000 Super profit = Average profit – Normal Profit = 90000 – 75000 = 15000 Goodwill = Average of annual super profit x 100 / Normal Rate of return = 15000 x 100 / 15 = 100000

Answer»

Answer:

Step 1: Calculate average estimated profits

Step 2: Calculate the capitalised average profits

Step 3: Calculate the value of Actual capital EMPLOYED or net assets of the business

Step 4: Calculate goodwill by SUBTRACTING the actual capital employed from the capitalised average profit

Explanation:

NORMAL profit = Capital employed x Normal rate of return / 100

= 5,00,000 x 15 / 100

= 75000

Super profit = Average profit – Normal Profit

= 90000 – 75000

= 15000

Goodwill = Average of annual super profit x 100 / Normal Rate of return

= 15000 x 100 / 15

= 100000

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