A firm has an average profit of ₹50,000, normal rate of return 10%, capital employed ₹4,00,000. Goodwill by capitalization of super profit method (if capitalized at 10%) will be:
A. ₹10,000
B. ₹1,00,000
C. ₹2,00,000
D. ₹50,000
Answer: Option B
Solution (By JKSSB Mock Tests)
Normal profit = 10% of 4,00,000 = 40,000. Super profit = 50,000 - 40,000 = 10,000. Goodwill by capitalization of super profit = 10,000 / 10% = ₹1,00,000.
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