A partnership firm has a total capital of ₹80 crores and expects a normal rate of profit of 12%. During the year the firm earned a profit of ₹12 crores. Using the super‑profit method with a capitalization rate of 15%, calculate the goodwill of the firm.

Step-by-step solution

1. Normal profit = Normal rate × Total capital
2. Normal profit = 12% × ₹80 crores = ₹9.6 crores
3. Super profit = Actual profit – Normal profit
4. Super profit = ₹12 crores – ₹9.6 crores = ₹2.4 crores
5. Goodwill = Super profit ÷ Capitalization rate
6. Goodwill = ₹2.4 crores ÷ 0.15 = ₹16 crores

Concept tested: Super profit method

Published 27 September 2026 · How this solution was prepared and checked