Difference between Average Profit and Super Profit class 12

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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.

BasisAverage ProfitSuper Profit
MeaningIt is the average of the normal profit of past agreed years.It is the excess of average profit over normal profit.
Normal Rate of ReturnThe 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 EmployedAverage capital employed is not considered while calculating average profit.Average capital employed is taken into account while calculating the super profit.
Relevance of valuing GoodwillAverage 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.
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Anurag Pathak
Anurag Pathak

Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.

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