Arrange Steps For Capitalisation of Super Profits:

(A) Calculate average profit for the past years, as specified.
(B) Calculate the capital of the firm.
(C) Calculate normal profits on capital employed.
(D) Multiply the super profits with the required rate of return multiplier
(E) Calculate super profits by deducting normal profits from average profits.

Choose the correct answer from the options given below:

(B), (C), (A), (E), (D)

The correct answer is Option (4) → (B), (C), (A), (E), (D)

(B) Calculate the capital of the firm, which is equal to total assets (excluding goodwill and ficticious assets) minus outside liabilities.

(C) Calculate normal profits on capital employed.

(A) Calculate average profit for the past years, as specified.

(E) Calculate super profits by deducting normal profits from average profits.

(D) Multiply the super profits with the required rate of return multiplier

Goodwill = Super Profits × 100 Normal Rate of Return