From the following information, compute the value of goodwill by capitalizing super profit:…

From the following information, compute the value of goodwill by capitalizing super profit:
1.Average capital employed: Rs.10,00,000
2.Normal rate of profit: 10%
3.Profit for 2007: Rs.1,55,000; 2008: Rs.1,47,500; 2009: Rs.1,65,000
Profit for 2008 has been arrived at after writing off abnormal loss of Rs.5,000 and profit for 2009 includes a non-recurring income of Rs.7,500

 

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