The capital of the firm of Rajat and Karan is ₹ $\displaystyle 15,00,000$ and the market rate of interest is $\displaystyle 12$%. Annual salary of Rajat and Karan is ₹ $\displaystyle 20,000$ and ₹ $\displaystyle 30,000$ respectively. The profits for the last three years were ₹ $\displaystyle 2,40,000$, ₹ $\displaystyle 2,80,000$ and ₹ $\displaystyle 3,20$,000. Goodwill of the firm is to be valued on the basis of two years purchase of last three years' average super profits. Calculate the goodwill of the firm.

Goodwill= Super profit x Number of years’ purchase Normal profit= Normal Rate of return/$\displaystyle 100$ x Capital Employed = $\displaystyle 12$/$\displaystyle 100$ x₹$\displaystyle 15,00,000$ = ₹$\displaystyle 1,80,000$………..…………………………………………. $\displaystyle 1$/$\displaystyle 2$ Average profit= (₹$\displaystyle 2,40,000$+ ₹$\displaystyle 2,80,000$+ ₹$\displaystyle 3,20,000$)/$\displaystyle 3$ = ₹$\displaystyle 2,80,000$ Average profit less partners’ salary= ₹$\displaystyle 2,80,000$- ₹$\displaystyle 50,000$ = ₹$\displaystyle 2,30,000$………………………………………………..1 Average Super profit/ Super profit = Average profit - Normal profit =₹$\displaystyle 2,30,000$- ₹$\displaystyle 1,80,000$ =₹$\displaystyle 50,000$………………………………….……$\displaystyle 1$/$\displaystyle 2$ Goodwill= Super profit x Number of years’ purchase = ₹$\displaystyle 50,000$ x $\displaystyle 2$ = ₹$\displaystyle 1,00,000$…………………………………………………………………$\displaystyle 1$ Alternate answer: Interest on capital employed = $\displaystyle 12$/$\displaystyle 100$ x₹$\displaystyle 15,00,000$= ₹$\displaystyle 1,80,000$ Partners salary= ₹$\displaystyle 20,000$ +₹$\displaystyle 30,000$ = ₹$\displaystyle 50,000$ Normal Profit= Interest on capital employed + Partners’ salary= ₹$\displaystyle 1,80,000$ +₹$\displaystyle 50,000$= ₹$\displaystyle 2,30,000$…. $\displaystyle 1$ Average profit= (₹$\displaystyle 2,40,000$+ ₹$\displaystyle 2,80,000$+ ₹$\displaystyle 3,20,000$)/$\displaystyle 3$ = ₹$\displaystyle 2,80,000$……………………………………………..………………… $\displaystyle 1$/$\displaystyle 2$ Average Super profit= Average profit - Normal profit =₹$\displaystyle 2,80,000$- ₹$\displaystyle 2,30,000$ =₹$\displaystyle 50,000$…………………………………………………..…………………$\displaystyle 1$/$\displaystyle 2$ Goodwill= Super profit x Number of years purchase = ₹$\displaystyle 50,000$ x $\displaystyle 2$ = ₹$\displaystyle 1,00,000$………………………………………………………………………$\displaystyle 1$