Seema and Laksh were partners in a firm sharing profits and losses in the ratio of 2 : 1. Their capitals were

Question

Q. Seema and Laksh were partners in a firm sharing profits and losses in the ratio of 2 : 1. Their capitals were ₹2,00,000 and ₹1,80,000 respectively. They admitted Aadi as a new partner on 1st April, 2023 for 1/5 th share in future profits. Aadi brought ₹1,50,000 as his share of capital. The goodwill of the firm on Aadi's admission will be : (A) ₹7,50,000 (B) ₹2,20,000 (C) ₹3,70,000 (D) ₹1,50,000

CBSECBSE Class XII Board 2024MCQ· 1mImportance★★★★★

✓ Free question

Concept understanding — Super Profit Method

The Super Profit Method: From Everyday Intuition to Exam-Ready Knowledge

Think about two shops in your neighbourhood. One is an old, trusted general store that has been running for 20 years. The other is a brand-new supermarket that opened last month. Both sell groceries. Both have the same amount of money invested (say, ₹10 lakh each). But the old store earns ₹2 lakh profit every year, while the new one earns only ₹1.5 lakh.

Why the difference? The old store has loyal customers, a prime location, a good reputation, and experienced staff. These are intangible assets — not physical like a building or machinery, but valuable nonetheless. In accounting, we call this extra earning power Goodwill.

The Super Profit Method is one way to calculate the value of this Goodwill. It answers the question: How much extra profit does the business earn compared to what a normal business with the same investment would earn?

What Exactly is "Super Profit"?

Let's break it down step by step.

Normal Profit is the profit that an average business in the same industry would earn on its capital employed. For example, if the normal rate of return in the grocery business is 15%, then on a capital of ₹10 lakh, the normal profit would be:

Normal Profit = Capital Employed × Normal Rate of Return

= ₹10,00,000 × 15/100 = ₹1,50,000

Actual Profit is what the business actually earns. In our old store's case, it's ₹2,00,000.

Super Profit is the difference:

Super Profit = Actual Profit − Normal Profit

= ₹2,00,000 − ₹1,50,000 = ₹50,000

This ₹50,000 is the extra profit the business earns because of its goodwill. The Super Profit Method values goodwill as a multiple of this super profit.

Important

Goodwill = Super Profit × Number of Years' Purchase

The "number of years' purchase" is a multiplier agreed upon by the parties (usually 2 to 5 years). It reflects how many years of extra profit the buyer is willing to pay for.

Why Does This Method Matter?

In Class 12, you encounter this method in two main situations:

When a new partner is admitted into a firm. The existing partners have built the goodwill over time. The new partner must compensate them for it.
When a partner retires or dies. The outgoing partner is entitled to their share of the firm's goodwill.

The Super Profit Method is preferred when the firm's profits are stable and predictable. It's more objective than the Average Profit Method because it explicitly accounts for what a "normal" business would earn.

The Accounting Treatment: Which Account is Debited and Credited?

When a new partner brings in their share of goodwill (in cash), the journal entry is:

Particulars	L.F.	Debit (₹)	Credit (₹)
Cash/Bank A/c	Dr.	xxx
To Goodwill A/c			xxx
(Being goodwill brought in by the new partner)

Then, the goodwill amount is distributed among the old partners in their sacrificing ratio (the ratio in which they have given up their share of profit):

Particulars	L.F.	Debit (₹)	Credit (₹)
Goodwill A/c	Dr.	xxx
To Old Partner 1's Capital A/c			xxx
To Old Partner 2's Capital A/c			xxx
(Being goodwill credited to old partners in sacrificing ratio)

Watch out

A common mistake: Students often debit the new partner's capital account directly. That is wrong. The new partner brings cash, which goes to the bank. Goodwill is a separate account that is then distributed.

The Proforma: Partners' Capital Account

When goodwill is adjusted through capital accounts (without bringing cash), the format in your NCERT textbook looks like this:

Partners' Capital Accounts

Particulars	Old Partner 1 (₹)	Old Partner 2 (₹)	New Partner (₹)	Particulars	Old Partner 1 (₹)	Old Partner 2 (₹)	New Partner (₹)
To Goodwill A/c (new partner's share)	—	—	xxx	By Balance b/d	xxx	xxx	xxx
To Balance c/d	xxx	xxx	xxx	By Goodwill A/c (old partners' share)	xxx	xxx	—
Total	xxx	xxx	xxx	Total	xxx	xxx	xxx

Notice: The new partner's capital account is debited with their share of goodwill (because they are paying for it), and the old partners' capital accounts are credited with their respective shares (because they are receiving it).

A Worked Example (NCERT-Style)

Suppose A and B are partners sharing profits in the ratio of 3:2. Their capital employed is ₹5,00,000. The normal rate of return is 10%. The average profit of the last 3 years is ₹80,000. They admit C as a new partner. Goodwill is valued at 3 years' purchase of super profit.

Step 1: Calculate Normal Profit

Normal Profit = ₹5,00,000 × 10/100 = ₹50,000

Step 2: Calculate Super Profit

Super Profit = ₹80,000 − ₹50,000 = ₹30,000

Step 3: Calculate Goodwill

Goodwill = ₹30,000 × 3 = ₹90,000

If C brings ₹90,000 as his share of goodwill, the journal entries are:

Bank A/c Dr. ₹90,000

To Goodwill A/c ₹90,000
Goodwill A/c Dr. ₹90,000

To A's Capital A/c (3/5) ₹54,000

To B's Capital A/c (2/5) ₹36,000

Tip

Always check: The sacrificing ratio is the same as the old profit-sharing ratio unless otherwise stated. In admission, the old partners sacrifice in their old ratio.

The Bottom Line

The Super Profit Method is not just a formula — it's a way of thinking about what makes a business truly valuable beyond its physical assets. For your exam:

Memorise the formula: Goodwill = Super Profit × Years' Purchase
Know the steps: Normal Profit → Super Profit → Goodwill
Master the journal: Debit Bank, Credit Goodwill; then Debit Goodwill, Credit Old Partners' Capital
Practice the proforma: The Partners' Capital Account format is a sure-shot question

Goodwill = Super Profit × Number of Years' Purchase — this single line, written correctly, can fetch you full marks in a 6-mark question.

Aadi brings ₹1,50,000 for a 1/5 share, so the firm's capitalised value is ₹1,50,000 × 5 = ₹7,50,000. The net worth of the firm after admission (all partners' capital) is ₹2,00,000 + ₹1,80,000 + ₹1,50,000 = ₹5,30,000. Hidden goodwill = ₹7,50,000 − ₹5,30,000 = ₹2,20,000. Correct option: (B).

Concept: Hidden Goodwill on Admission

When a new partner brings in capital for an agreed share of profits but no separate amount is given for goodwill, the goodwill is "hidden" inside the capital he brings. It is found by the capitalisation method: the capital the new partner pays, scaled up by his share, gives the total value the firm is worth (its capitalised value); the goodwill is the excess of that value over the firm's actual net worth (net assets).

Step-by-Step Solution

Step 1 — Capitalised value of the firm (based on Aadi's capital)

Aadi brings ₹1,50,000 for a 1/5 share. If 1/5 of the firm is worth ₹1,50,000, the whole firm is worth:

Capitalised value = Aadi's capital × (reciprocal of his share) = 1,50,000 × 5/1 = ₹7,50,000

Step 2 — Net worth (net assets) of the firm after admission

The net worth is the total capital actually standing in the firm once Aadi joins — the two old partners' capital plus Aadi's capital:

Partner	Capital (₹)
Seema	2,00,000
Laksh	1,80,000
Aadi	1,50,000
Net worth of firm	5,30,000

Step 3 — Hidden goodwill

Goodwill = Capitalised value − Net worth = 7,50,000 − 5,30,000 = ₹2,20,000

Watch out

The most common error is to subtract only the OLD partners' capital (₹3,80,000) and report ₹3,70,000 (option C). Aadi's own ₹1,50,000 is part of the firm's net worth after his admission, so it must be included — ₹3,70,000 is the classic trap option, not the answer.

✓Final answer

The goodwill of the firm on Aadi's admission is ₹2,20,000, which corresponds to option (B) .

Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

Showing the 12 most recent of 33 on this concept.

CBSE 2026Set 67/4/11 markMCQ
$Q. A business earned an average profit of ₹ 2,00,000 during the last few years. The value of net assets of the business is ₹ 17,00,000 and the normal rate of return in a similar business is 10%. The value of goodwill of the business by capitalisation of super-profits method will be : (A) ₹ 17,00,000 (B) ₹ 2,00,000 (C) ₹ 3,00,000 (D) ₹ 30,000$
›Reveal solutionSolution

Goodwill under the Capitalisation of Super-Profit Method is ₹ 3,00,000 — calculated as Super Profit (₹ 30,000) divided by the Normal Rate of Return (10%).

We are asked to find goodwill using the Capitalisation of Super-Profit Method. This method is a refinement of the simple capitalisation approach. The core idea is that goodwill represents the excess earning capacity of the business over and above what is considered normal for the industry.

First, understand the logic. A business has net assets worth ₹ 17,00,000. If a similar business earns a normal return of 10% on its investment, then the normal profit for a business of this size would be 10% of ₹ 17,00,000 = ₹ 1,70,000. But our business actually earns an average profit of ₹ 2,00,000. That extra ₹ 30,000 (₹ 2,00,000 – ₹ 1,70,000) is the Super Profit — the profit attributable to goodwill.

Now, the Capitalisation of Super-Profit Method asks: "If this super profit of ₹ 30,000 is the return on goodwill, and the normal rate of return is 10%, then what must be the value of that goodwill?" The answer is found by capitalising the super profit at the normal rate.
$Goodwill = Super Profit / Normal Rate of Return$
Let us now compute each figure step by step.

Working Note 1: Normal Profit

Normal Profit = Value of Net Assets × Normal Rate of Return

Normal Profit = ₹ 17,00,000 × 10/100 = ₹ 1,70,000

Working Note 2: Super Profit

Super Profit = Average Actual Profit – Normal Profit

Super Profit = ₹ 2,00,000 – ₹ 1,70,000 = ₹ 30,000

Working Note 3: Goodwill by Capitalisation of Super-Profit

Goodwill = Super Profit / Normal Rate of Return

Goodwill = ₹ 30,000 / (10/100) = ₹ 30,000 × 100/10 = ₹ 3,00,000

Watch out

A common mistake is to forget that the normal rate of return is applied to the net assets, not to the capital employed or total assets. Also, ensure you divide the super profit by the rate (expressed as a decimal or fraction), not multiply it. Another pitfall is confusing this method with the simple capitalisation method (where goodwill = Capitalised Value of Average Profit – Net Assets). That method gives a different figure (₹ 3,00,000 as well in this case, but the logic is distinct).

Tip

A quick check: If the super profit is ₹ 30,000 and the normal return is 10%, then the capital that would generate ₹ 30,000 at 10% is simply ₹ 30,000 × 10 = ₹ 3,00,000. This is because 10% of the capital = super profit, so capital = super profit × (100/10).

Therefore, the value of goodwill is ₹ 3,00,000.

✓Final answer
$The goodwill of the business under the Capitalisation of Super-Profit Method is ₹ 3,00,000, which corresponds to option (C).$
CBSE 2026Set 67/5/11 markMCQ
$Q. Mansi and Uma were partners in a firm and their capitals were ₹ 4,00,000 and ₹ 2,00,000 respectively. Normal rate of return in a similar business was 15% and the goodwill of the firm was valued at ₹ 4,00,000. If goodwill was calculated at four years purchase of super profits, the average profits of the firm were : (A) ₹ 90,000 (B) ₹ 60,000 (C) ₹ 1,00,000 (D) ₹ 1,90,000$
›Reveal solutionSolution

The average profit is ₹ 1,90,000, which corresponds to option (D).

This is a straightforward application of the Super Profit Method of goodwill valuation. The logic is simple: goodwill is the price paid for earning profits above the normal level. The question gives you the goodwill, the normal rate of return, and the capital employed — you work backwards to find the average profit.

Step 1: Understand the formula chain.

Goodwill under the Super Profit Method is calculated as:

Goodwill = Super Profit × Number of Years' Purchase

And Super Profit itself is:

Super Profit = Average Profit – Normal Profit

So if we know goodwill and the number of years' purchase, we can find the super profit. Then, using the normal profit, we can find the average profit.

Step 2: Calculate Normal Profit.

Normal profit is the return a similar business would earn on the capital invested. Here, the total capital employed is the sum of the partners' capitals:

Total Capital = ₹ 4,00,000 (Mansi) + ₹ 2,00,000 (Uma) = ₹ 6,00,000

Normal Rate of Return = 15%

Therefore:

Normal Profit = 15% of ₹ 6,00,000 = ₹ 90,000

Step 3: Calculate Super Profit.

We are told goodwill is ₹ 4,00,000 and it was calculated at four years' purchase of super profits.

Using the formula:

Goodwill = Super Profit × Number of Years' Purchase

₹ 4,00,000 = Super Profit × 4

Super Profit = ₹ 4,00,000 / 4 = ₹ 1,00,000

Step 4: Calculate Average Profit.

Now we use the super profit formula:

Super Profit = Average Profit – Normal Profit

₹ 1,00,000 = Average Profit – ₹ 90,000

Average Profit = ₹ 1,00,000 + ₹ 90,000 = ₹ 1,90,000

Watch out

A common mistake is to forget that the capital employed is the total of both partners' capitals, not just one. Also, ensure you divide goodwill by the number of years' purchase, not multiply.

Tip

You can solve this in one step: Average Profit = (Goodwill / Years' Purchase) + Normal Profit. Here, that's (₹ 4,00,000 / 4) + ₹ 90,000 = ₹ 1,00,000 + ₹ 90,000 = ₹ 1,90,000.

✓Final answer
$The average profits of the firm were ₹ 1,90,000, which corresponds to option (D).$
CBSE 2026Set ANNUAL1 mark
$Q. If a firm earns a profit of ₹ 50,000 p.a. on an average basis and the normal rate of return is 10% p.a. What will be the capitalised value of average profits?$
›Reveal solutionSolution

Capitalised value of average profits = ₹ 5,00,000.

Capitalised value of a business (on the basis of its average profits) is computed as:

Capitalised Value of Average Profits = Average Profit × (100 / Normal Rate of Return)

Here, Average Profit = ₹50,000 and Normal Rate of Return = 10% p.a.

Capitalised Value = 50,000 × (100/10) = 50,000 × 10 = ₹5,00,000.

(This capitalisation method is commonly used as the basis for valuing goodwill of a firm, where Goodwill = Capitalised Value of Average Profits − Net (Capital Employed) Assets of the firm.)

✓Final answer
$Capitalised value of average profits = ₹ 50,000 / 10% = ₹ 5,00,000.$
CBSE 2026Set ANNUAL1 markMCQ
$Q. Under super profit method, Goodwill is calculated by$
(a) Number of Years' Purchase × Average Profit
(b) Number of Years' Purchase × Super Profit
(c) Super Profit ÷ Normal Rate of Return
(d) Super Profit – Normal Profit
›Reveal solutionSolution
Super Profit Method values Goodwill as: Number of Years' Purchase × Super Profit (not Average Profit, and not the capitalisation-style division used in the Capitalisation of Super Profit Method).

Super Profit = Average Profit − Normal Profit, where Normal Profit = Capital Employed × Normal Rate of Return. It represents the extra profit the firm earns over and above what any similar business in the same industry would normally earn on the same capital — this "extra earning power" is exactly what goodwill compensates for.

Under the (plain) Super Profit Method:

Goodwill = Super Profit × Number of Years' Purchase

This should not be confused with:

Average Profit Method: Goodwill = Average Profit × Number of Years' Purchase (uses average profit, not super profit).

Capitalisation of Super Profit Method: Goodwill = Super Profit × (100 / Normal Rate of Return) — this is "Super Profit ÷ Normal Rate of Return" expressed as a percentage, a different (though related) valuation approach.

✓Final answer
$Option (b) "Number of Years' Purchase \times Super Profit" — this is the defining formula of the Super Profit Method of goodwill valuation.$
CBSE 2026Set ANNUAL1 mark
$Q. A Firm's average profit is ₹ 5,00,000. The normal rate of return on capital employed of ₹ 40,00,000 is 10%. What is the value of goodwill using three years purchase of super profit ?$
›Reveal solutionSolution

Goodwill (Super Profit Method) = Super Profit × Number of Years' Purchase = ₹1,00,000 × 3 = ₹3,00,000.

Step 1 — Calculate Normal Profit:

Normal Profit = Capital Employed × Normal Rate of Return

= 40,00,000 × 10%

= ₹4,00,000

Step 2 — Calculate Super Profit:

Super Profit = Average Profit − Normal Profit

= 5,00,000 − 4,00,000

= ₹1,00,000

Super profit represents the extra earning capacity of the firm over and above what any similar business would normally earn on the same capital — this "extra" is precisely what goodwill compensates for.

Step 3 — Calculate Goodwill:

Goodwill = Super Profit × Number of Years' Purchase

= 1,00,000 × 3

= ₹3,00,000

This method is considered more scientific than the simple average-profit method because it links goodwill directly to the firm's ABNORMAL earning power rather than its total profit.

✓Final answer
$Value of goodwill (Super Profit Method, 3 years' purchase) = ₹3,00,000.$
CBSE 2025Set 67/4/11 markMCQ
$Q. Neeru and Pooja were partners in a partnership firm sharing profits and losses in the ratio of 4 : 3. The firm earned average profits of ₹ 5,00,000 during the last few years. The normal rate of return in a similar business is 10%. The average super profits of the firm were ₹ 4,00,000. The amount of capital employed by the firm was : (A) ₹ 90,00,000 (B) ₹ 40,00,000 (C) ₹ 50,00,000 (D) ₹ 10,00,000$
›Reveal solutionSolution

The capital employed is ₹ 10,00,000, calculated by dividing the average profit (₹ 5,00,000) minus the super profit (₹ 4,00,000) by the normal rate of return (10%).

This is a straightforward application of the Super Profit Method of valuation of goodwill — but here we are working backwards to find capital employed. The logic is simple: super profit is the excess of actual average profit over the normal profit (which is capital employed × normal rate of return). So if we know the super profit and the average profit, we can find the normal profit, and from that, the capital employed.

Let’s lay out the relationship clearly:

Average Profit = Normal Profit + Super Profit

Here, Average Profit = ₹ 5,00,000 and Super Profit = ₹ 4,00,000.

Therefore, Normal Profit = Average Profit − Super Profit = ₹ 5,00,000 − ₹ 4,00,000 = ₹ 1,00,000.

Now, Normal Profit is simply the return that the capital employed should earn at the normal rate.

Normal Profit = Capital Employed × Normal Rate of Return

So, Capital Employed = Normal Profit ÷ Normal Rate of Return

= ₹ 1,00,000 ÷ 10%

= ₹ 1,00,000 ÷ 0.10

= ₹ 10,00,000.

Watch out

A common mistake is to directly divide the average profit by the normal rate of return. That would give ₹ 5,00,000 ÷ 10% = ₹ 50,00,000 (option C), which is wrong because it ignores the fact that the firm is earning super profits — meaning its actual profit is above normal. The capital employed is only the base that earns the normal return; the extra (super profit) is attributable to goodwill, not to capital.

Tip

Think of it as: Capital employed is the amount that, at the normal rate, produces the normal profit — not the average profit. So always subtract super profit from average profit first.

Thus, the correct answer is ₹ 10,00,000, which corresponds to option (D).

✓Final answer
$The capital employed by the firm is ₹ 10,00,000 (Option D).$
CBSE 2025Set MARCH1 markMCQ
$Q. Superprofit means ______$
(a) Capital employed – Expected profit
(b) Expected profit – Capital employed
(c) Average profit – Expected profit
(d) Expected profit – Average profit
›Reveal solutionSolution
Super profit = Average (actual) profit − Expected (normal) profit. Correct option: (c).

In the super-profit method of goodwill valuation (GSEB Class-12 Commerce):

Expected (normal) profit = Capital employed × Normal rate of return.

Super profit = Average profit earned by the firm − Expected/normal profit.

Only the surplus above normal earnings represents the extra earning power for which goodwill is paid.

✓Final answer
$(c) Average profit - Expected profit.$
CBSE 2025Set MARCH1 mark
$Q. If the value of goodwill of a firm under capitalisation of super profit @ 8% normal rate is ₹ 1,50,000, the amount of super profit in this case will be what ?$
›Reveal solutionSolution

Super Profit = Goodwill × Normal Rate / 100 = 1,50,000 × 8/100 = ₹ 12,000.

✓Final answer
$Capitalisation of super profit method: Goodwill = Super Profit \times (100 / Normal Rate of Return) Here goodwill = ₹ 1,50,000 and normal rate = 8%. Rearranging to find super profit: Step Working Result Formula Goodwill = Super Profit \times 100 / 8 Solve for Super Profit Super Profit = 1,50,000 \times 8 / 100 ₹ 12,000 Cross-check: Super Profit \times 100 / Rate = 12,000 \times 100 / 8 = 12,000 \times 12.5 = ₹ 1,50,000, which matches the given goodwill. ✓ Therefore the super profit is ₹ 12,000.$
CBSE 2025Set ANNUAL1 markMCQ
$Q. Under superprofit basis goodwill is calculated by (A) Purchase year x Average profit (B) Purchase year x Superprofit (C) Purchase year \div Average profit (D) None of these$
›Reveal solutionSolution
The super profit method values goodwill as Super Profit multiplied by the agreed Number of Years' Purchase. Hence the correct option is (B) Purchase year x Superprofit.

In the super profit method of valuing goodwill (BSEB Inter / Bihar Class-12 Accountancy), the steps are:

Normal Profit = Capital Employed x Normal Rate of Return

Super Profit = Average Profit - Normal Profit

Goodwill = Super Profit x Number of Years' Purchase

Goodwill is based on super profit (not average profit) because only the profit earned above the normal expected return reflects the firm's extra earning capacity. Multiplying by the number of years' purchase estimates how long that extra profit is expected to continue. Hence option (B).

✓Final answer
$(B) Purchase year x Superprofit.$
CBSE 2025Set ANNUAL1 markMCQ
$Q. What do you understand by superprofit ? (A) Total profit \div No. of years (B) Average profit - Normal profit (C) Weighted profit \div No. of years purchase (D) None of these$
›Reveal solutionSolution
Super profit is the amount by which a firm's average (actual) profit exceeds the normal profit it would normally earn on its capital employed. Hence Super Profit = Average Profit - Normal Profit, option (B).

For Bihar Class-12 (BSEB Inter) commerce candidates:

Average Profit = total adjusted profits divided by number of years.

Normal Profit = Capital Employed x Normal Rate of Return.

Super Profit = Average Profit - Normal Profit.

Super profit represents the extra earning capacity of the firm above the normal return expected in that line of business. A firm earns goodwill only when it generates super profit; if average profit just equals normal profit, there is no super profit and no goodwill under this method. Hence option (B).

✓Final answer
$(B) Average profit - Normal profit.$
CBSE 2025Set ANNUAL1 markMCQ
$Q. Average profit is Rs. 15,000. The value of goodwill based on two years purchase of superprofit is Rs. 18,000. Normal profit is (A) Rs. 6,000 (B) Rs. 12,000 (C) Rs. 24,000 (D) None of these$
›Reveal solutionSolution
Normal profit works out to Rs. 6,000 — option (A).

Under the Super Profit Method of valuing goodwill used in the WBCHSE HS Accountancy course:

Goodwill = Super Profit x Number of years' purchase

Super Profit = Average Profit - Normal Profit

Step 1 - Find super profit:

Goodwill Rs. 18,000 = Super Profit x 2 years, so Super Profit = 18,000 / 2 = Rs. 9,000.

Step 2 - Find normal profit:

Super Profit = Average Profit - Normal Profit

9,000 = 15,000 - Normal Profit

Normal Profit = 15,000 - 9,000 = Rs. 6,000.

✓Final answer
$The correct answer is (A) Rs. 6,000.$
CBSE 2025Set ANNUAL1 mark
$Q. What is meant by Superprofit?$
(OR)
$What is Goodwill?$
›Reveal solutionSolution

Super Profit = Average Profit - Normal Profit; Goodwill = the monetary value of a firm's reputation/earning advantage.

What is meant by Super Profit?

Super profit is the amount by which a firm's actual (average) profit exceeds the normal profit it would be expected to earn on its capital employed. In formula form:

Super Profit = Average Profit - Normal Profit, where Normal Profit = Capital Employed x Normal Rate of Return. A positive super profit indicates the firm earns more than comparable businesses and is the basis of several goodwill-valuation methods.

OR - What is Goodwill?

Goodwill is the value of a business's good name, reputation and connections that enables it to earn profits higher than normal. It is an intangible fixed asset that arises from factors such as quality, location, efficient management and customer loyalty, and it becomes important on admission, retirement, death of a partner, or sale of the firm.

✓Final answer
$Super Profit = Average Profit - Normal Profit (profit earned above the normal expected return). OR - Goodwill is the monetary value of a firm's reputation/earning advantage, an intangible asset.$

Step	Working	Result
Formula	Goodwill = Super Profit × 100 / 8
Solve for Super Profit	Super Profit = 1,50,000 × 8 / 100	₹ 12,000

Concept: Hidden Goodwill on Admission

Step-by-Step Solution

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