"From the following information calculate the amount of Goodwill - Net Assets - 60,000 Average Profit - 20,000 Normal Rate of Return - 20%"

12,000 18,000 20,000 40,000

40,000

"Goodwill = Capitalised Value of Average Profits - Net Assets Capitalised Value = Average Profit*100/ NRR = 20,000 *100 / 20 = 1,00,000 Goodwill = 1,00,000 - 60,000 = 40,000 "