The following is the Balance Sheet of Mr. X as on 31.12.2016: Liabilities Capital General Reserve...

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The following is the Balance Sheet of Mr. X as on 31.12.2016: Liabilities Capital General Reserve Creditors ² 1,64,000 Land and Building 40.000 Plant 38,040 Investment Inventories Bank Debtors Assets ₹ 36,000 54,500 30,000 26,350 75.990 19,200 2,42,040 2,42,040 The following were the net profits for the year ended : 2014:32,280; 2015: 36,870; 2016: 43.350. The above amounts include income from investment, 1,800 each year. You are required to value the Goodwill of the above business at 2 years' purchase of the average super profit for 3 years, taking into account the fact that the standard rate of return on capital employed in such type of business is 10% and assuming that each year's profit is immediately withdrawn in full by Mr. X. The following is the Balance Sheet of Mr. X as on 31.12.2016: Liabilities Capital General Reserve Creditors ² 1,64,000 Land and Building 40.000 Plant 38,040 Investment Inventories Bank Debtors Assets ₹ 36,000 54,500 30,000 26,350 75.990 19,200 2,42,040 2,42,040 The following were the net profits for the year ended : 2014:32,280; 2015: 36,870; 2016: 43.350. The above amounts include income from investment, 1,800 each year. You are required to value the Goodwill of the above business at 2 years' purchase of the average super profit for 3 years, taking into account the fact that the standard rate of return on capital employed in such type of business is 10% and assuming that each year's profit is immediately withdrawn in full by Mr. X.

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2 years purchase of the average super profit for 3 years 32280 3... View the full answer