Valuation of goodwill (Question Bank)

 Valuation of goodwill

OBJECTIVE TYPE QUESTIONS

  The amount of goodwill is paid by the new partner:

1. for the payment of capital
2. for sharing the profit
3. for purchase of assets
4. None of these

 

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Goodwill is capitalized valued of ________.

1. Super Profit
2. Capital employed
3. Normal Profit
4. Gross Profit

 

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________ is the excess of actual profit over normal profit.

1. Super Profit
2. Average Profit
3. Normal profit
4. Super Loss

 

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Capitalisation method for goodwill is used when:

1. No. of years purchase is not given
2. When total assets are given
3. When business is sold
4. Always when calculating super profits

 

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When the business is taken over by another business, the excess of purchase consideration over its net value asset is referred to as ____.

1. Purchase Goodwill
2. Generated Goodwill
3. Average Goodwill
4. Super Goodwill

 

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The formula for Capitalisation of Super Profit Method is

1. Super Profit ×× Number of years purchase
2. Super Profit ×× 100 / Normal Rate of Return
3. (Super Profit - Normal Profit) ×× 100 + Normal Rate of Return.
4. None of these

 

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Types of goodwill are

1. Purchase Goodwill and Self Generated Goodwill.
2. Purchase Goodwill and Super Goodwill
3. Average Goodwill and Generated Goodwill
4. Average Goodwill and Super Goodwill

 

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Following are the factors affecting goodwill except:

1. Nature of business
2. Efficiency of Management
3. Technical Knowledge
4. Location of the Customers

 

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Formula for capitalization of Average Profit is

1. Average Profit × 100 Normal rate of return Average Profit × 100 Normal rate of return
2. Average Profit Normal rate of return Average Profit Normal rate of return
3. Average Profit Normal Profit Average Profit Normal Profit 
4. Average Profit + 100 Normal Profit Average Profit + 100 Normal Profit 

 

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The Valuation of Goodwill is not necessary in Sole Trading:

1. On selling the Firm
2. On making a partner
3. On the estimation of Assets
4. On Closing the Firm

 

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Normal profit is calculated to value goodwill

1. by deducting abnormal gains (profit)
2. by adding abnormal losses
3. by deducting abnormal gains and adding abnormal losses
4. None of these

 

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The excess amount which the firm gets on selling its business over and above the net value is

1. Surplus
2. Super profits.
3. Reserve
4. Goodwill

 

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Goodwill can be sold only when:

1. Entire business is sold
2. At the time of Merger
3. Business earning profits
4. New partner is admitted

 

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Total capital employed in the firm is ₹ 8,00,000, Normal Rate of Return is 15% and Profit for the year is ₹ 12,00,000. The value of goodwill of the firm as per the capitalisation method would be

1. ₹ 82,00,000
2. ₹ 12,00,000
3. ₹ 72,00 000
4. ₹ 42,00,000

 

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Which of the following statement is correct?

1. Goodwill is a fictitious asset
2. Goodwill is a current asset
3. Goodwill is a wasting asset
4. Goodwill is an intangible asset

 

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Goodwill under Average Profit Method means

1. Average profit ×× Number of year's purchase
2. Normal profit ×× Number of year's purchase
3. Super profit ×× Number of year's purchase
4. None of these

 

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When Goodwill is not purchased, Goodwill can

1. not be accounted in the books
2. be accounted in the books
3. be partially accounted in the books
4. be accounted as per the agreement of the partners

 

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Under the Capitalisation of Super Profit, the formula for calculating the goodwill is

1. Super profit multiplied by the rate of return
2. Average profit multiplied by the rate of return
3. Super profit divided by the rate of return
4. Average profit divided by the rate of return

 

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When there is no Goodwill Account in the books and goodwill is raised, ________ account will be debited.

1. Partner’s Capital
2. Goodwill
3. Cash
4. Reserve

 

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Which of the following is not a method of valuing goodwill?

1. Average Profit Method
2. Super Profit Method
3. Capitalisation Method
4. Discounted Cash Flow Method

 

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________ is the goodwill which is not purchased for consideration but is earned by the efforts of the management.

1. Purchased Goodwill
2. Self-generated Goodwill
3. Profit and Loss
4. None of these

 

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Purchased goodwill arises at the time of

1. Closure of business
2. Purchase of business
3. Opening of a new business
4. All of these

 

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Calculate the average profit of last four year's profits. The profits of the last four years were:

2008	27000
2009	39000
2010	16000 (loss)
2011	40000

1. Rs. 22500
2. ₹10000
3. ₹30000
4. ₹40000

 

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________ means capital invested in the firm to carry on business.

1. Service and goods
2. Trade Investment
3. Capital Employed
4. None of these

 

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According to AS 26, which goodwill is recorded in the books :

1. purchased goodwill
2. self generated goodwill
3. both (i) and (ii)
4. None of the above

 

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Verma Brothers earn a profit of Rs. 90,000 with a capital of Rs. 4,00,000. The normal rate of return in the business is 15%. Use Capitalization of super profit method to value the goodwill.

1. Rs.2,00,000
2. Rs.150000
3. Rs.250000
4. Rs. 2,25,000

 

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In the case of going concern when business is not to be sold, it becomes necessary to value goodwill whenever the mutual rights of the partners change. A party which is making a sacrifice must be compensated and that is normally on the basis of ______.

1. Goodwill
2. Profit
3. Interest
4. Loss

 

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Goodwill is

1. an intangible asset
2. a fictitious asset
3. Both an intangible asset and a fictitious asset
4. None of these

 

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Profit/loss of a firm for the last 4 years is Rs. 10,000 (Loss); Rs.15,000 profit; 20,000 profit; Rs.15,000 profit. Calculate Goodwill at 112112 years purchase of average profits of the last 4 years.

1. Rs.15,000
2. Rs.25,000
3. Rs.20,000
4. Rs.10,000

Super Profit means

1. Average profit
2. Excess of average profit over normal profit
3. Normal profit
4. None of these

 

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Which of the following statement is correct?

1. Goodwill is a fictitious asset
2. Goodwill is a current asset
3. Goodwill is a wasting asset
4. Goodwill is an intangible asset

 

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Business showed that the capital employed on January 1, 2007 was Rs. 4,50,000 and the profits for the last five years were as follows: 2007-Rs. 40,000; 2008 -Rs.50,000; 2009- Rs. 60,000; 2010 -Rs. 70,000 and 2011 -Rs.80,000.You are required to find out the value of goodwill, based on three year's purchase of the super profit of the business given that the normal rate of return is 10%.

1. Rs. 45000
2. Rs. 40000
3. Rs. 42000
4. Rs. 46000

 

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When the business is taken over by another business, the excess of purchase consideration over its net value asset is referred to as ____.

1. Purchase Goodwill
2. Generated Goodwill
3. Average Goodwill
4. Super Goodwill

 

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When there is no Goodwill Account in the books and goodwill is raised, ________ account will be debited.

1. Partner’s Capital
2. Goodwill
3. Cash
4. Reserve

 

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Goodwill given in the old Balance Sheet will be:

1. Written off to the old partners
2. Written off by the Sacrificing partners
3. Credited to old Partners Capital accounts
4. Distributed by Gainer partners

 

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The formula for Capitalisation of Super Profit Method is

1. Super Profit ×× Number of years purchase
2. Super Profit ×× 100 / Normal Rate of Return
3. (Super Profit - Normal Profit) ×× 100 + Normal Rate of Return.
4. None of these

 

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Average profit of a business over the last five years was ₹ 60,000. The normal commercial yield on capital invested in such business is 10% p.a. The net capital invested in the business is ₹ 5,00,000. Amount of goodwill, if it is based on 3 years' purchase of last 5 year's super-profits will be

1. ₹ 1,00,000
2. ₹ 1,80,000
3. ₹ 30,000
4. ₹ 1,50,000

 

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An asset that is not fictitious but intangible in nature, having realizable value is:

1. Machinery
2. Building
3. Furniture
4. Goodwill

 

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Purchased goodwill arises at the time of

1. Closure of business
2. Purchase of business
3. Opening of a new business
4. All of these

 

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________ is the goodwill which is not purchased for consideration but is earned by the efforts of the management.

1. Purchased Goodwill
2. Self-generated Goodwill
3. Profit and Loss
4. None of these

 

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Goodwill can be sold only when:

1. Entire business is sold
2. At the time of Merger
3. Business earning profits
4. New partner is admitted

 

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Weighted Average Profit Method of calculating goodwill is used when

1. Profits are not equal
2. Profits show a trend
3. Profits are fluctuating
4. None of these

 

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When Goodwill is not purchased, Goodwill can

1. not be accounted in the books
2. be accounted in the books
3. be partially accounted in the books
4. be accounted as per the agreement of the partners

 

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A firm earned net profits during the last three years as:

2008-­09	Rs.36,000
2009­-10	Rs.40,000
2010­-11	Rs.44,000

The capital investment of the firm is Rs.1,20,000. A fair return on the capital having regard to the risk involved is 10%. Calculate the value of goodwill on the basis of three year's purchase of the super profit for the last three year.

1. Rs. 84000
2. Rs. 70000
3. Rs.65000
4. Rs.92000

 

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________ is the goodwill which is acquired by making a payment.

1. Self-Generated Goodwill
2. Purchased Goodwill
3. Nature of Goods
4. Trend of Profit

 

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According to AS 26, which goodwill is recorded in the books :

1. purchased goodwill
2. self generated goodwill
3. both (i) and (ii)
4. None of the above

 

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A firm earns Rs. 65,000 as its average profits. The usual rate of earning is 10%. The total assets of the firm amounted to Rs. 6,80,000 and liabilities are Rs.1,80,000. Calculate the value of goodwill.

1. Rs.1,50,000
2. Rs.120000
3. Rs.110000
4. Rs.100000

 

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Calculate the average profit of last four year's profits. The profits of the last four years were:

2008	27000
2009	39000
2010	16000 (loss)
2011	40000

1. Rs. 22500
2. ₹10000
3. ₹30000
4. ₹40000

 

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________ is the excess of actual profit over normal profit.

1. Super Profit
2. Average Profit
3. Normal profit
4. Super Loss

 

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Formula for capitalization of Average Profit is

1. Average Profit × 100Normal rate of returnAverage Profit × 100Normal rate of return
2. Average Profit Normal rate of returnAverage Profit Normal rate of return
3. Average Profit Normal Profit Average Profit Normal Profit 
4. Average Profit + 100 Normal Profit Average Profit + 100 Normal Profit 

 

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Capitalisation method for goodwill is used when:

1. No. of years purchase is not given
2. When total assets are given
3. When business is sold
4. Always when calculating super profits

 

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Total capital employed in the firm is ₹ 8,00,000, Normal Rate of Return is 15% and Profit for the year is ₹ 12,00,000. The value of goodwill of the firm as per the capitalisation method would be

1. ₹ 82,00,000
2. ₹ 12,00,000
3. ₹ 72,00 000
4. ₹ 42,00,000

 

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Goodwill of the firm is not affected by

1. Location of the firm
2. Favourable contracts
3. Better customer service
4. None of these

 

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Goodwill is

1. an intangible asset
2. a fictitious asset
3. Both an intangible asset and a fictitious asset
4. None of these

 

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Buyer's advantage lies in the excess of the normal return on capital employed. The excess of actual/average profit over normal profit is known as

1. Super profit
2. Normal return
3. Capital employed
4. Average Method profit

 

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Goodwill is an ________ asset.

1. Intangible asset
2. Tangible asset
3. Both Intangible asset and Tangible asset
4. None of these

 

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A firm earns ₹ 1,10,000.The normal rate of return is 10%. The assets of the firm were ₹ 11,00,000 and liabilities ₹ 1,00,000. Value of goodwill by the capitalisation of average profit will be

1. ₹ 2,00,000
2. ₹ 10,000
3. ₹ 5,000
4. ₹ 1,00,000

 

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As per Accounting Standard-26,

1. purchased goodwill is accounted in the books of account
2. self-generated goodwill is accounted in the books of account
3. both purchased and self-generated goodwill are accounted in the books of account
4. None of these

 

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Which of the following factors decreases the value of goodwill?

1. Favourable Location
2. Favourable Contracts
3. Customer Satisfaction
4. Continuously incurring losses

 

       3 marks

Varuna and Karuna are partners for equal shares. They admit Lata into a partnership for 1/4th share. It was agreed to value goodwill of the firm at 4 years' purchase of super profit. Normal rate of return is 15% of the capital employed. Average profit of the firm is ₹ 4,00,000. Balance Sheet of the firm as at 31st March, 2019 was as follows:  

Liabilities		₹	Assets	₹
Capital A/cs:			Furniture	4,00,000
Varuna	5,00,000		Computers	3,00,000
Karuna	5,00,000	10,00,000	Electrical Fittings	1,00,000
Long-term Loan		5,50,000	Investments (Trade)	2,00,000
Sundry Creditors		2,00,000	Stock	3,00,000
Outstanding Expenses		50,000	Sundry Debtors	3,00,000
Advances from Customers		1,50,000	Bills Receivable	50,000
			Cash in Hand	50,000
			Cash at Bank	2,00,000
			Deferred Revenue Expenditure:
			Advertisement Suspense	50,000
		19,50,000		19,50,000

​Calculate the value of goodwill.

 

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Firm’s Capital is ₹ 2,00,000. The normal rate of return on a firm’s capital is 15%. During the year 2015, the firm earned a profit of ₹ 48,000. Calculate goodwill on the basis of 3 years purchase of super profit?

[[NCERT Textbook]]

 

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Capital of the firm of Sharma and Verma is ₹ 2,00,000 and the market rate of interest is 15%. Annual salary to partners is ₹ 12,000 each. The profits for the last three years were ₹ 60,000; ₹ 72,000 and ₹ 84,000. Goodwill is to be valued at 2 years' purchase of last 3 years' average super profit. Calculate goodwill of the firm.

[2013]

 

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State any three circumstances other than (i) death of a partner (ii) admission of a partner and (iii) retirement of a partner when need for valuation of goodwill of a firm may arise.

[2016]

 

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The total capital of the firm of Sakshi, Mehak and Megha is ₹ 1,00,000 and the market rate of interest is 15%. The net profits for the last 3 years were ₹ 30,000; ₹ 36,000 and ₹ 42,000. Goodwill is to be valued at 3 years' purchase of the last 3 years' super-profits. Calculate the goodwill of the firm.

[2017]

 

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On 1st April, 2014 a firm had assets of Rs 1,00,000 excluding stock of Rs 20,000. Partners’ capital accounts showed a balance of Rs 60,000. The current liabilities were Rs 10,000 and the balance constituted the reserve. If the normal rate of return is 8% the ‘Goodwill’ of the firm is valued at Rs  60,000 at four years’ purchase of super profit, find the average profit of the firm.

[2015]

 

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Gupta and Bose had a firm in which they had invested ₹ 50,000. On an average, the profits were ₹ 16,000. The normal rate of return in the industry is 15%. Goodwill is to be valued at four years' purchase of profits in excess of profits @ 15% on the money invested. Calculate the value goodwill.

 

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A partnership firm earned net profits during the past three years as follows:

Year ended	31st March, 2019	31st March, 2018	31st March, 2017
Net Profit (₹)	2,30,000	2,00,000	1,70,000

Capital investment in the firm throughout the above-mentioned period has been ₹ 5,00,000. Having regard to the risk involved, 10% is considered to be a fair return on the capital. The remuneration of the partners during this period is estimated to be ₹ 1,00,000 p.a.
Calculate value of goodwill on the basis of two years' purchase of average super profit earned during the above-mentioned three years.

 

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Average profit earned by a firm is ₹ 2,50,000 which includes an overvaluation of stock of ₹ 10,000 on an average basis. Capital invested in the business is ₹ 14,00,000 and the normal rate of return is 15%. Calculate goodwill of the firm on the basis of 4 times the super profit.

 

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Average profit of the firm is ₹ 2,00,000. Total assets of the firm are ₹ 15,00,000 whereas Partners' Capital is ₹ 12,00,000. If normal rate of return in a similar business is 10% of the capital employed, what is the value of goodwill by Capitalisation of Super Profit?

 

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Calculate capital employed by Liabilities Side Approach and Assets Side Approach from the following Balance Sheet:

Liabilities		₹	Assets	₹
Capital A/cs:			Land and Building	3,00,000
Amrit	2,00,000		Goodwill	60,000
Sudhir	2,00,000	4,00,000	Investments (Trade)	1,00,000
Reserves		1,80,000	Stock	1,00,000
Sundry Creditors		1,80,000	Sundry Debtors	1,40,000
Outstanding Expenses		20,000	Cash at Bank	60,000
			Deferred Revenue Expenditure: Advertisement Suspense	20,000
		7,80,000		7,80,000

 

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A, B and C are partners sharing profits and losses equally. They agree to admit D for equal share. For this purpose goodwill is to be valued at 3 year’s purchase of average profits of last 5 years which were as follows:

	₹
Year ending on 31st March 2013	60,000 (Profit)
Year ending on 31st March 2014	1,50,000 (Profit)
Year ending on 31st March 2015	20,000 (Loss)
Year ending on 31st March 2016	2,00,000 (Profit)
Year ending on 31st March 2017	1,85,000 (Profit)

On 1st October 2016 a computer costing ₹ 40,000 was purchased and debited to the office expenses account on which depreciation is to be charged @25% p.a. Calculate the value of goodwill.
Hint: Adjusted profit of 2017 will be: ₹ 1,85,000 + ₹ 40,000 - Depreciation ₹ 5,000 = ₹ 2,20,000.

 

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A business has earned average profit of ₹ 1,00,000 during the last few years and the normal rate of return in a similar business is 10%. Ascertain the value of goodwill by capitalisation average profits method, given that the value of net assets of the business is ₹ 8,20,000.

[[NCERT Textbook]]

 

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Divya purchased Jyoti's business with effect from 1st April, 2019. Profits shown by Jyoti's business for the last three ​financial years were:

2016-17	₹ 1,00,000 (including an abnormal gain of ₹ 12,500)
2017-18	₹ 1,25,000 (after charging an abnormal loss of ₹ 25,000)
2018-19	₹ 1,12,500 (excluding ₹ 12,500 as insurance premium on the firm's property- now to be insured)

Calculate the value of the firm's goodwill on the basis of three year's purchase of the average profit of the last three years.

 

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Average profit earned by a firm is ₹ 1,00,000 which includes undervaluation of stock of ₹ 40,000 on an average basis. The capital invested in the business is ₹ 6,30,000 and the normal rate of return is 5%. Calculate goodwill of the firm on the basis of 5 times the super profit.

[2015]

 

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Average profit of the firm is ₹ 1,50,000. Total tangible assets in the firm are ₹ 14,00,000 and outside liabilities are ₹ 4,00,000. In the same type of business, the normal rate of return is 10% of the capital employed.
Calculate value of goodwill by Capitalisation of Super Profit Method.

 

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Aman purchased Bharatendu's business with effect from 1st April, 2019. It was agreed that the firm's goodwill will be valued at two years' purchase of average normal profit of the last three years. Profits of Bharatendu's business for last three years ended 31 st March, were:
2017: ₹ 1,00,000 (including an abnormal gain of ₹ 10,000)
2018: ₹ 1,10,000 (after charging an abnormal loss of ₹ 20,000)
2019: ₹ 85,000 (including interest of ₹ 5,000 from non-trade investment).
Calculate value of the firm's goodwill.

 

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The goodwill of a firm is valued at ₹ 1,35,000 at 3 years' purchase of super profit.
Determine the missing values:
Average Profit =₹3,60,0003=₹3,60,0003 = ₹ 1,20,000
Normal Profit = ₹ ________ ×15100×15100 = ₹ ________
Super Profit = Average Profit - Normal Profit
= ₹ 1,20,000 - ₹ ________ = ₹ ________
Goodwill = Super Profit ×× No. of Years' Purchase.

 

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Balance Sheet of M/s Super Stores as at 31st March 2019 was as follows:

Liabilities		₹	Assets	₹
Capital A/cs:			Land and Building	4,00,000
Alia	1,50,000		Computers	70,000
Ranbir	1,50,000		Furniture	30,000
Rishi	1,50,000	4,50,000	Investments	1,00,000
Reserves		2,50,000	Stock	2,00,000
Sundry Creditors		3,00,000	Sundry Debtors	1,50,000
Outstanding Expenses		10,000	Bills Receivable	50,000
Bank Overdraft (Cash Credit)		90,000	Cash in Hand	50,000
			Deferred Revenue Expenditure: Advertisement Suspense	50,000
		11,00,000		11,00,000

The average Profit was ₹ 1,25,000. You are to calculate goodwill at 3 years' purchase of Super Profits if the Normal Rate of Return is 15% of Capital Employed.

 

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Akansha, Chetna and Deepanshu are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. They decide to lake Jatin into partnership form January 1, 2015 for 1/5 share in the future profits. For this purpose, goodwill is to be valued at 2 times the average annual profits of the previous four years. The average profits for the past four years were.

Year	(₹)
2012	96,000
2013	60,600
2014	62,400
2015	84,400

Calculate the value of goodwill.

 

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Balance sheet of Ram and Bharat showed that the firm’s capital on 31.12.2019 was ₹ 5,00,000 and the profits for the last 5 years: 2018 ₹ 40,000; 2017 ₹ 50,000; 2016 ₹ 55,000; 2015 ₹ 70,000 and 2014 ₹ 85,000. Calculate the value of goodwill on the basis of 3 years purchase of the super-profits of the last 5 years assuming that the normal rate of return is 10%?

[[NCERT Textbook]]

 

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Why does the need for valuation of goodwill arise in relation of partnership firm?

 

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M/s Aradhya having the assets of Rs 10,00,000 and Liabilities of Rs 4,20,000. The firm earns the annual profit of Rs. 90,000. The rate of interest expected from the capital having regard to the risk involved is 15%. Calculate the amount of Goodwill by Capitalisation of Super Profit method.

 

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Bhaskar and Pillai are partners sharing profits and losses in the ratio of 3 : 2. They admit Kanika into partnership for 1/4th share in profit. Kanika brings in her share of goodwill in cash. Goodwill for this purpose is to be calculated at two years' purchase of the average normal profit of past three years. Profits of the last three years ended 31st March, were:
2017 - Profit ₹ 50,000 (including profit on sale of assets ₹ 5,000).
2018 - Loss ₹ 20,000 (including loss by fire ₹ 30,000).
2019 - Profit ₹ 70,000 (including insurance claim received ₹ 18,000 and interest on investments and Dividend received ₹ 8,000).
​Calculate the value of goodwill. Also, calculate goodwill brought in by Kanika.

 

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The capital of the firm of Anu and Benu is ₹ 1,00,000 and the market rate of interest is 15%. The annual salary to partners is ₹ 6,000 each. The profits for the last 3 years were ₹ 30,000; ₹ 36,000 and ₹ 42,000. Goodwill is to be valued at 2 years purchase of the last 3 years' average super-profits. Calculate the goodwill of the firm.

[[NCERT Textbook]]

 

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A B and C are partners in firm sharing profits and losses in the ratio of 3 : 2 : 1. They decide to take D into a partnership for 1/4th share on 1st April 2017. For this purpose, goodwill is to be valued at 3 times the average annual profits of the previous four or five years whichever is higher. The agreed profits for goodwill purpose of the past five years are as follows:

	₹
Year ending on 31st March 2013	1,30,000
Year ending on 31st March 2014	1,20,000
Year ending on 31st March 2015	1,50,000
Year ending on 31st March 2016	1,10,000
Year ending on 31st March 2017

Calculate the value of Goodwill.

 

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Ayub and Amit are partners in a firm and they admit Jaspal into partnership w.e.f. 1st April, 2019. They agreed to value goodwill at 3 years' purchase of Super Profit Method for which they decided to average profit of last 5 years. The profits for the last 5 years were:

Year Ended	Net Profit (₹)
31st March, 2015	1,50,000
31st March, 2016	1,80,000
31st March, 2017	1,00,000	(Including abnormal loss of ₹ 1,00,000)
31st March, 2018	2,60,000	(Including abnormal gain (profit) of ₹ 40,000)
31st March, 2019	2,40,000

The firm has total assets of ₹ 20,00,000 and Outside Liabilities of ₹ 5,00,000 as on that date. Normal Rate of Return in similar business is 10%.
Calculate value of goodwill.

 

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On 1st April, 2018, a firm had assets of ₹ 3,00,000 including cash of ₹ 5,000. The Partners' Capital Accounts showed a balance of ₹ 2,00,000 and the Reserve constituted the rest. If the normal rate of return is 10% and the goodwill of the firm is valued at ₹ 2,00,000 at four years' purchase of super profit, find the average profit of the firm.

 

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A firm earned average profit of Rs.3,00,000 during the last few years. The normal rate of return of the industry is 15%. The assets of the business were Rs.17,00,000 and its liabilities were Rs.2,00,000. Calculate the goodwill of the firm by capitalisation of average profits.

[2019]

 

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Anupma, Pumima and Ruchika are partners in a business. Balances in their Capital and Current Accounts as on 31st March, 2019 were:

	Capital Account	Current Account
	₹	₹
Anupma	6,00,000	6,00,000 (Dr.)
Pumima	5,00,000	30,000 (Dr.)
Ruchika	5,00,000	10,000 (Dr.)

The firm earned an average profit of ₹ 2,40,000. If the normal rate of return is 12%, find the value of goodwill by Capitalisation of Average Profit Method.