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how does one calculate goodwill by super profit method
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Answer Posted / nagaraj
When the actual profit is more than the expected profit or
normal profit of a firm, it is called ‘Super Profit.’ Under
this method goodwill is to be calculate of on the following
manner:
Goodwill = Super Profit x Number of Years Purchase
CAPITAL EMPLOYED = Rs. 7,30,49,249
Financial Year Product
2006-07 2,60,40,742.63
2007-08 77,77,726.00
2008-09 1,34,84,208.75
2009-10 2,83,01,883.14
TOTAL 7,56,04,560.00
(Rounded off
Average Profit = Rs. 75604560 /4 = Rs. 1,89,01,140
Normal Profit = Rs. 7,30,49,249x 10/100 = Rs. 73,04,925
Super Profit = Actual/Average Profit - Normal Profit
Super Profit = Rs. 1,89,01,140-Rs. 73,04,925= Rs.
1,15,96,215
Goodwill = Rs. 1,15,96,215 x 3 = Rs. 3,47,88,645
| Is This Answer Correct ? | 36 Yes | 2 No |
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