Super Profit is the addition of original profit over the normal profit of an organization. An ordinary method of valuation of goodwill is the super profit method.

2. 
A business organization may process some advantages
which facilitate
 it to make additional profits over and above the amount
that would
 grossed if the capital of the business organization was
devoted
 elsewhere with like jeopardy.
 These additional profits usually expressed as super
profits, can be
 esteemed and goodwill is the worth of the few years’
purchase of super
 profit.
Continue Reading

3. 




Under this method, super profits are considered as the
basis for
computing goodwill in place of average profit. Similar to
the previous
method, that is average profit method, this value is also
calculated by
applying a traditional rule suitable in the trade for
instance, three to
four years purchase of super profit.
Continue Reading

4. 
Step 1: The amount of capital invested is computed.

Step 2: The normal return by increasing capital
Continue Reading

5. 
Step 3: The average maintainable profit of the firm is to
be computed.
 Step 4: The difference between the average
maintainable profit and
 normal return as computed above is calculated. The
difference is
 termed as Super Profit if the value is positive.
 Step 5: Product of super profit and the number of years’
purchase is
 computed. The resultant figure will be the goodwill.
Continue Reading

6. 





X and Y are equal partners. They decide upon to admit
Z for an equal
share. For the purpose of admission of Z, the goodwill
of the firm to be
valued at 4 years’ purchase of super profit. The capital
invested in the
firm is $50,000. The normal rate of return may be taken
as 10% per
annum. Average maintainable profit of the firm is
$7,500. Compute the
value of the goodwill.
Continue Reading

7. 
Capital Invested is $50,000,

Normal return = $50,000 x 10% = $5,000

Average maintainable profit is $7,500

Super Profit = $7,500 - $5,000 = $2,500;

the value of goodwill = $2,500 x 4 = $10,000
Continue Reading

8. 
1 Accounting 9 C 17 JavaScript
 2 Finance 10 Visual Basic 18 Shell Scripting
 3 Statistics 11 C# (C Sharp) 19 Math
 4 Economics 12 Matlab Programming 20 Chemistry
 5 Operations 13 Database 21 Physics
 6 Marketing 14 ER Diagrams 22 Dissertations
 7 Java 15 Oracle 23 Case Study
 8 C++ 16 Microsoft (MS) Access 24 Project
Management
Continue Reading

9. 
Website: http://www.tutorsonnet.com

Mail Us: sendquestions@tutorsonnet.com

Phone: +91 98803 85500