Model: Super profits method The books of the business showed that the capital employed on 31 March 2010, Rs.6,00,000 and the profits for the last 5 years were:
|
Years |
|
|
2005–06: |
50,000 |
|
2006–07: |
60,000 |
|
2007–08: |
70,000 |
|
2008–09: |
80,000 |
|
2009–10: |
1,40,000 |
You are required to calculate the value of goodwill based on 3 years’ purchase of the super profits of the business, given that the normal rate of return is 10%.