A business has earned average profits of Rs.1,00,000 during the last few years and the normal rate of return in a similar business is 10% per annum. Goodwill of the firm based on Capitalization of Average Profits is valued at Rs.1,80,000. The value of total assets of the business is Rs.10,00, 000.Its external liabilities are
A. Rs.1,00,000
B. Rs.80,000
C. Rs.1,80,000
D. NIL
Answer:C
A business has earned average profits of Rs.1,00,000 during the last few years and the normal rate of return in a similar business is 10% per annum. Goodwill of the firm based on Capitalization of Average Profits is valued at Rs.1,80,000. The value of total assets of the business is Rs.10,00, 000.Its external liabilities are
A. Rs.1,00,000 B. Rs.80,000 C. Rs.1,80,000 D. NIL