Difference between Average Profit and Super Profit class 12
Confused, What is the difference between Average Profit and Super Profit in class 12 Accountancy CBSE, ISC, and State Board.
Don’t worry, we have explained this topic in detail.
Average Profit vs Super Profit (Difference and Comparison)
Let’s learn it.
| Basis | Average Profit | Super Profit |
| Meaning | It is the average of the normal profit of past agreed years. | It is the excess of average profit over normal profit. |
| Normal Rate of Return | The normal rate of return is not relevant in the calculation of average profit. | The normal rate of return is considered while calculating the super profit. |
| Average Capital Employed | Average capital employed is not considered while calculating average profit. | Average capital employed is taken into account while calculating the super profit. |
| Relevance of valuing Goodwill | Average profit is relevant for the average profit method, super profit method, and capitalization method of valuation of goodwill. | Super profit is relevant for the Super Profit Method and Capitalisation of the Super Profit Method of valuation of goodwill. |
