Calculate compensation of employees from the data given below : S. No. | Particulars | Amount (in Rs. crore) (i) | Interest | 45 (ii) | Profits after tax | 20 (iii) | Consumption of fixed capital | 50 (iv) | Gross Domestic Product at market price (GDP_MP) | 200 (v) | Rent | 25 (vi) | Corporate tax | 5 (vii) | Goods and Services tax | 10

Question

Accepted Answer

Using Income Method:
NDP_FC = COE + Operating Surplus + Mixed Income
We need to find COE.

GDP_MP = 200, Depreciation = 50, NIT = GST - Subsidies (but subsidies not given, assume NIT = GST = 10)
NDP_FC = GDP_MP - Depreciation - NIT = 200 - 50 - 10 = 140

Operating Surplus = Rent + Interest + Profit
Profit = Profits after tax + Corporate tax = 20 + 5 = 25
Operating Surplus = 25 + 45 + 25 = 95

NDP_FC = COE + OS + Mixed Income
140 = COE + 95 + 0 (Mixed Income not given, assume 0)
COE = 140 - 95 = Rs. 45 crore

Compensation of Employees = Rs. 45 crore