Total assets of a firm is Rs. 8,40,000. The liabilities of the firm is Rs. 4,40,000. Normal rate of return in this class of business is 12 1/2%. The firm earned a profit of 2 Rs. 64,000. Calculate goodwill, if it is to be valued at 2 years' purchase of super profit.

Answer rating: 100% (QA)

To calculate the goodwill of the firm we need to use the formula Goodwill 2 years purchase of super ... View the full answer