CBSE Class 12-commerce Answered
Ajit and baljit were sharing profits in the ratio of 3:2. They decided to admit chaman into the partnership for a 1/6th share of the future profits. Goodwill, valued at 3 times the average super profits of the firm, was Rs.18000. The firm had assets worth Rs. 15 lakh and liabilities to the firm of Rs. 12 lakhs. The notmal earning capacity of such firms is expected to be 10% p.a. Find the average profits/actual profits earned by the firm during the last 3 years.
Asked by Anjali83 | 22 Apr, 2018, 07:46: AM
Expert Answer
Capital Employed = Assets - Liabilities = 15 Lacs - 12 Lacs = 3 Lacs
Normal Rate of Return = 10%
Normal Profits = 10% of 3 Lacs = 30,000
Goodwill at 4 times purchase of super profits = 18,000
Super Profits = 18,000/4 = 4,500
Therefore, Average Profits earned by firm are Normal Profits + Super Profits = 30,000 + 4,500 = 34,500
Answered by | 22 Apr, 2018, 01:09: PM
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