The net profit of a business, after providing for taxation, for the past five years are :
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The net profit of a business, after providing for taxation, for the past five years are : ₹80,000; ₹85,000; ₹92,000; ₹1,05,000 and ₹1,18,000. The capital employed in the business is ₹8,00,000. The normal rate of return expected in this type of business is 10%. It is expected that the company will be able to maintain the super profit for the next 5 years. Calculate the value of goodwill on the basis of :
(a) 5 years’ purchase of super profit method,
(b) Annuity method, taking the present value of annuity of ₹1 for five years at 10% as 3.78 and
(c) Capitalisation of super profit method.
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Related Book For
Corporate Accounting As Per The Companies Act 2013 Including Rules 2014 And 2015
ISBN: 9789352605569
2nd Edition
Authors: M Hanif, A Mukherjee
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