X and Y are partners with capital of ₹440000 and ₹40000. If the firm earned an average profit of ₹90000 and the normal rate of return is 10%. Find out the value of goodwill?
Answer & explanation
Correct answer: option 1
Capitalised value of business= 90000*100/10 = ₹900000 Capital employed = 440000+ 40000 = ₹480000
GOODWILL= 900000-480000= ₹420000