Reference no: EM132044155
Question - From the following information, calculate the value of goodwill by super profit method.
(i) Average Capital employed in the business $700,000.
(ii) Net trading profit of the firm for the past three years $147,600; $148,100 and $152,500.
(iii) Rate of Interest expected from capital having regard to the risk involved -18%.
(iv) Fair remuneration to the partners for their services 12,000 per annum.
(v) Sundry Assets (excluding goodwill) of the firm $754,762.
(vi) Sundry Liabilities $31,329.
(vii) Goodwill valued at 2 years' purchase
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