Homework Answers
| Average Profit = Sum Total Of Profit Of All The Years / No. Of Years | ||||||
| Average Profit = (20000+25000+45000+40000+55000) / 5 | ||||||
| Average Profit = | 37000 | |||||
| Super Profit = Average Profit - Normal Profit | ||||||
| Normal Profit = Capital Employed X Normal Rate Of Return | ||||||
| Normal Profit = 400000 X 8% | ||||||
| Normal Profit = | 32000 | |||||
| Super Profit = | 5000 | |||||
| Goodwill = Super Profit X No. Of Years Purchase | ||||||
| The Number Of Years Of Purchase Is Determined | ||||||
| With Reference To The Probability Of New Business To Catch | ||||||
| Up With An Existing Business. It Will Differ From Industry To | ||||||
| Industry And From Firm To Firm. Normally The Number Of | ||||||
| Years Ranges Between 3 To 5. | ||||||
| Therefore Assuming It Is 5 For This Question | ||||||
| Goodwill = | 25000 | |||||
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owned business which Jonathan started 15 years ago, issuing 900
shares of the 1000 authorized, at a par value of $100 a share. ABC
Company is a small manufacturer which produces ladies’ sports
apparel. The business has employed as many as 30 people; however,
sales have slipped the last three years, according to Jonathan, due
to competition in the marketplace, and the economy. Currently, the
business employs nine people, including...
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