Puneet and Tarun are in the restaurant business having credit balances in their fixed capital accounts as ₹ 2,50,000 each. They have credit balances in their Current Accounts of ₹ 30,000 and ₹ 20,000 respectively. The firm does not have any liability. They are regularly earning profits and their average profit for the last 5 years is ₹ 1,00,000. If the normal rate of return is 10%. Find the value of goodwill by Capitalisation of the Average Profit Method.
[Ans.: Goodwill – ₹ 4,50,000]
Solution:-
