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A firm earns Rs.10,000 as its normal profits. The rate of normal return being 10%. + from the following find out the value of goodwill.

<p> The assets of the firm amount to Rs.72,000 and liabilities to Rs.24,000. Find out the value of goodwill.</p> <p>(a) Rs.52,000</p> <p>(b) Rs.1,00,000</p> <p>(c) Rs.28,000</p> <p>(d) Nil</p>

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Question added by VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.
Date Posted: 2014/10/06
ABDUL MAJEED KOOTHRADAN
by ABDUL MAJEED KOOTHRADAN , Audit Manager , TS Meera Associates Chartered Accountants

Normal Value of the firm100,000 Net asset72,000-24,000 Goodwill = Normal value- Actual Value of the firm So answer is52,000

khalid Hassanien
by khalid Hassanien , Financial Manger , Alrwania Ltd

Total assets = 10,000 /0.1 =100,000 Rs

100,000 -72,000 =28,000 Rs

So, Answer is (c) Rs.28,000.

SREEDEVI SUNILKUMAR
by SREEDEVI SUNILKUMAR , Business finance officer , Emirates Airline

Capitalised Value of Average Profits = Average Profits X (100 / Normal Rate of Return)

Capital Employed = Assets - Liabilities

Goodwill = Capitalised Value of Average Profits - Capital Employed

Hence Value of goodwill (a) Rs.52,000

mohamed Hakim CMA CPA Candidate
by mohamed Hakim CMA CPA Candidate , Accounting Manager , Andersen saudi arabia

C :28000

Total assets =100000

 if assets72000 

Then good will =28000

 

 

Sheraz Ahmad
by Sheraz Ahmad , Accountant , Lahore Business Systems

Goodwill  is Future expected cash flows/benefit - net assest

Future Expected benefit or cash flow =10,000 /10%    =  100,000

Net asset = total asset - current liabilities =72000 -24000 =48000

Goodwill =100,000-48000 =52000

zahira khan
by zahira khan , Finance Specialist(Mgmt. Reporting) , The Emirates Group

RS28000

manaf almas
by manaf almas , Auditor , DAR AL NUZUM PUBLIC ACCOUNTANTS

goodwill=super profits *no of years purchased

super profit=actual profit - normal profit

normal profit=capital invested*normal rate of return/100

capital invested ==48000

normal profit=48000*10\\100=4800

super profit==5200

goodwill=5200*1=5200

 

Abhinav Agarwal
by Abhinav Agarwal , Operational & Financial Internal Auditor , Al futtaim Pvt. LLC

Goodwill of the firm can be52000 as per given information, 

As per accounting equation, capital = Assets - Outside Liabilities, i.e. capital =, =48000,

if we capitalize the profit of10000 with the return rate of10%, we got the capital of100000,

as per this we can say that the extra capital of52000 i.e. may be a goodwill.

georgei assi
by georgei assi , مدير حسابات , المجموعة السورية

(c) Rs.28,000

Sara Naeem
by Sara Naeem , Trainee Finance officer , Wah Brass Mill

C

Mohammed  Mohammed
by Mohammed Mohammed , Senior SAP Consultant , Abyat Mega Store

52000  is the correct answer .........

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