Calculating normal profit :
\(\text { Normal Profit = Capitat employed } \times \frac{\text { Normal Rate }}{100}\) 
= \(Rs.75,000 \times \frac{20}{100}=\text { Rs. } 15,000\) 
Calculation of Super Proftt
Good will = Super profit \(\times\) No. of years purchased
24,000 = Super profit \(\times\) 4
\(\text { Super profit }=\frac{\text { Rs } 24,000}{4}=\text { Rs. } 6,000\) 
Calculating of Averegl hofiit
Super Profit = Average Profit - Normal Profit
6000 = Average Profit - Rs. 15,000
Average profit = Rs. 6,000+ Rs. 15,000 = Rs. 21,000

Average Profit = Rs. 68,000 - Rs. 8,000 = Rs. 50,000
Norrnal profit = Capital employed \(\times\) Normal rate of return
= \(\text { Rs. } 3,50,000 \times \frac{12}{100}=\text { Rs. } 42,000\) 
Super Profit = Average Profit - Normal Profit
= Rs. 60,000 - Rs. 42,000 = Rs. 18,000
varue of Goodwill = Super Profit \(\times\) No.of years purchase
= Rs. 18,000 \(\times\) 2 = Rs. 36,000
Value of Goodwill = Rs. 36,000

Under this method value of Goodwill is calculated by capitalising the super profit. at normal rate of return that is, Goodwill is the capitalised value of super profit.
\(\text { Goodwill }=\frac{\text { Super profit }}{\text { Normal rate of return }} \times 100\)

Annuity refers to series of uniform cash flows at regular intervals. The table value gives the present value of annuity of rupee are received and the end of everyyear for a  number of years.
Annuity factor = \(\frac{i(1+i)^{n}}{(1+i)^{n}-1}\) 
Where i = interest rate
n = estimated number of years.

Value of Goodwill is calculated by multiplying the super profit with the present value of annuity.
Goodwill = Super profit x present valtte annuity factor.
Present value annuity factor is the present value of annuity of rupee one at a given time.
rt can be found out from annuity taute or by using formula

Goodwill is calculated by multiplying the weighted average profit by , certain number of years of purchase. Goodwill = weighted average profit x No of years purchase. In this method, weights are assigned to each year's profit - weighted profit is ascertained by, multiplying the weights assigned with the respective years profit.
\(\text { Weighted average profit }=\frac{\text { Total of weighted profit }}{\text { Total of weights }}\)

Goodwill is calculated by multiplying the average profit by a certain number of years of purchase. Simple average profit is calculated by adding the adjusted profits of certain number of years by dividing the total number of such years. Goodwill - Average profit x Number of years purchased.
\(\text { Average profit }=\frac{\text { Total profit }}{\text { Number of years }}\)

Under this method, Goodwill is calculated as certain years of purchase of average profit of the past few years. The number of years of purchase is generally determined on the basis of the average period a new business will take in order to bring it to the current state of the existing business.

The nature of the Goodwill can be described.
i) Goodwillis an intangible fixed asset. It is intangible because ithas no physical existence. It cannot be seen or touched.
ii) It has a definite value depending as the profitability of the business enterprise.
iii) It cannot be separated from the business
iv) It helps in earning more profit and attracts more customers.
v) It can be purchased or sold only when the business is purchased or sold in full or in part

The factors affecting the value of goodwill of the firm are
(i) Nature of business
(ii) Efficiently of management
The values which the firm is trying to propagate are
(i) Promoting education among the students of below poverty line.
(ii) Providing quality services to customers resulting in customer satisfaction

The factors affecting the goodwill of the firm are
(i) Location
(ii) Market situation
The values which the firm is trying to propagate are
(i) Sensitivity towards people belonging to lower income group.
(ii) Working towards customer satisfaction

(i) Under this method, goodwill is calculated by multiplying the weighted average profit by a certain number of years of purchase.
(ii) Goodwill = Weighted average profit x Number of years of purchase
(iii) In this method, weights are assigned to each year's profit. Weighted profit is ascertained by multiplying the weights assigned with the respective year's profit.
(iv) The sum of the weighted profits is divided by the sum of weights assigned to determine the weighted average profit
Weighted average profit
\(=\frac{Total\ of\ weighted\ profits}{Total\ of\ weights}\)

Goodwill may be classified into acquired goodwill or self-generated goodwill.
(i) Acquired or purchased goodwill:
(1) Goodwill acquired by making payment in cash or kind is called acquired or purchased goodwill.
(2) The excess of purchase consideration over the value of net assets acquired is treated as acquired goodwill.
(ii) Self - generated goodwill:
It is the goodwill which is self generated by a firm based on features of the business such as favourable location, local customers, etc. Such self-generated goodwill cannot be recorded in the books of accounts.

Following are the circumstances that require valuation of goodwill of partnership firms in order to protects the rights of the partners
(i) When there is a change in the profit sharing ratio
(ii) When a new partner is admitted into a firm
(iii) When an existing partner retires from the firm or when a partner dies.
(iv) When a partnership firm is dissolved

The nature of goodwill can be described as follows:
(i) Goodwill is an intangible fixed asset. It cannot be seen or touched.
(ii) It has a definite value depending on the profitability of the business enterprise.
(iii) It cannot be separated from the business
(iv) It helps in earning more profit and attracts more customers
(v) It can be purchased or sold only when the business is purchased or sold in full or in part