The net profit of a business, after providing for taxation, for the past five years are:...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The net profit of a business, after providing for taxation, for the past five years are: 80,000; 85,000; * 92,000; 1,05,000 and 1,18,000. The capital employed in the business is 8,00,000. The normal rate of return expected in this type of business is 10%. It is expected that the company will be able to maintain the super profit for the next 5 years. Calculate the value of goodwill on the basis of: (a) 5 years' purchase of super profit method, (b) Annuity method, taking the present value of annuity of 1 for five years at 10% as 3.78 and (c) Capitalisation of super profit method. The net profit of a business, after providing for taxation, for the past five years are: 80,000; 85,000; * 92,000; 1,05,000 and 1,18,000. The capital employed in the business is 8,00,000. The normal rate of return expected in this type of business is 10%. It is expected that the company will be able to maintain the super profit for the next 5 years. Calculate the value of goodwill on the basis of: (a) 5 years' purchase of super profit method, (b) Annuity method, taking the present value of annuity of 1 for five years at 10% as 3.78 and (c) Capitalisation of super profit method.
Expert Answer:
Answer rating: 100% (QA)
a The value of goodwill under the 5 years purchase of su... View the full answer
Related Book For
Supply Chain Focused Manufacturing Planning and Control
ISBN: 978-1133586715
1st edition
Authors: W. C. Benton
Posted Date:
Students also viewed these accounting questions
-
1. The construction industry was enjoying good time three years ago. During those year, your company bought few excavators to stay competitive in the market. Unfortunately business environment...
-
After graduating from business school, George Clark went to work for a Big Six accounting firm in San Francisco. Because his hobby has always been wine making, when he had the opportunity a few years...
-
You, CA, have been working for Plener and Partners, Chartered Accountants (P&P), a mid-size CA firm, for three years. You have been assigned a new project for a long-term client of your firm, Oxford...
-
Since perpetuity payments continue forever, how can a present value be computed? Why isnt the present value infinite?
-
The following data relate to the operations of Slick Software, Inc., during 2011. Continuing operations: Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....
-
Hare and Tortoise of Aesop's fable fame are having a rematch, a mile-long race. Hare has planned more carefully this time. Five minutes into the race, he figures he can take a \(40-\mathrm{min}\) nap...
-
Analyze the differences among nuclear, composite, and extended families and the societies in which they're found.
-
Copy the Mike Owjai Manufacturing financial statements from Problem 1 in Chapter 2 into a new workbook. a. Set up a ratio worksheet similar to the one in Exhibit 4-6, page 131, and calculate all of...
-
Discuss the role of the Translation Lookaside Buffer (TLB) in virtual memory systems. How does TLB caching improve address translation, and what impact do TLB misses have on system performance?
-
Alex Yeoman Painting Co. of Yellowknife uses a purchases journal (page 21) and a general journal (page 32) to record the following transactions. The GST rate is 5%. The paint store has decided to...
-
Use properties of limits and algebraic methods to find the limit, if it exists. (If the limit is infinite, enter" or "-", as appropriate If the limit does not otherwise exist, enter DNE.) 2x-4 lim...
-
What does MoSCow mean and how is it used?
-
What is one way of measuring whether randomization has been effective?
-
What's the format for writing the front of story card?
-
What is the most common statistical design? Explain it.
-
Differentiate between experimental and control groups.
-
You're involved in designing the new travel booking app for budget - conscious explorers. The app's primary goal is to help users find affordable travel options while offering a seamless booking...
-
A statistical study shows that the fraction of television sets of a certain brand that are still in service after x years is given by f (x) = e-0.15x. (a) What fraction of the sets are still in...
-
Why is business dynamism important in a world class manufacturing environment? Give three examples of supply chain dynamism.
-
What is the SCOR model? Discuss each level in detail. Why is the SCOR model important for a world class manufacturing organization? Which SCOR Model level is the most important for manufacturing...
-
Using the data below, develop a spreadsheet for finding the least-cost order quantities when there are quantity discounts (order cost = $60, inventory holding cost = 30 percent of item value, and...
-
The stiffness matrix \([C]\) for a specially orthotropic material associated with the principal material axes \((1,2,3)\) is given in Equation 2.16. Prove that, when the material is specially...
-
Using an example of static equilibrium of an element in pure two-dimensional (2D) shear stress, prove that the shear stresses are symmetric (i.e., prove that \(\sigma_{i j}=\sigma_{j i}\) when \(i eq...
-
A balanced orthotropic, or square symmetric lamina, is made up of \(0^{\circ}\) and \(90^{\circ}\) fibers woven into a fabric and bonded together, as shown in Figure 2.10. a. Describe the...
Study smarter with the SolutionInn App