From the following information, you are required to calculate the value of goodwill as per…

From the following information, you are required to calculate the value of goodwill as per capitalization of super profit method:
i.Capital employed: Rs.15,00,000
ii.Net profit for 5 years:
2006: Rs.1,44,000; 2007: Rs.1,54,000;
2008:Rs. 1,69,000; 2009: Rs.1,74,000;
2010: Rs.1,79,000
The profit included non-recurring profit on an average basis of Rs.10,000, out of which it was deemed that non-recurring profit had a tendency of appearing at the rate of Rs.7,000 p.a.
iii.Normal rate of profit: 10%

 

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