A and B are partners. The net assets of the firm, including fictitious assets of Rs. 5,000, are Rs. 1,05,000. The total external liabilities of the firm are Rs. 20,000. The normal rate of return is 10% and the average profit of the firm is Rs. 12,000. The value of goodwill as per capitalization of super profit method will be :
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Rs. 20,000
Under the capitalisation of super profit method, goodwill = super profit × 100 / normal rate of return. The capital employed leaves out goodwill and fictitious assets, and it is taken after outside liabilities.
Capital employed = net assets Rs. 1,05,000 − fictitious assets Rs. 5,000 = Rs. 1,00,000
Normal profit = 10% of Rs. 1,00,000 = Rs. 10,000
Super profit = Rs. 12,000 − Rs. 10,000 = Rs. 2,000
Goodwill = Rs. 2,000 × 100/10 = Rs. 20,000
“Net assets” are already after the external liabilities of Rs. 20,000, so they are not deducted a second time. Deducting them again would leave a capital of Rs. 80,000 and no option fits it.
NCERT (2026-27 edition):
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