Calculate the goodwill of firm on the basis of years purchase of the weighted average profit...

 

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Calculate the goodwill of firm on the basis of years purchase of the weighted average profit of the last four year. The appropriate weight to be used and profits are: Year 2014-15 2015-16 2016-17 2017-18 On a scrunity of the accounts, the Profit(Rs)1, 01, 0001, 24,0001, 00, 0001, 40,000 4 Weight 1 2 3 following matters are revealed: (i) On 1¹ December, 2016 a major repair was made in respect of the plant incurring Rs. 30,000 which was charged to revenue. The said sum is agreed to be capitalised for calculation subject to adjustment of depreciation of 10% p.a. on reducing balance method. (ii) The closing stock for the year 2015-16 was overvalued by Rs. 12,000 (iii) To cover management cost, an annual charge of Rs. 24,000 should be made for the purpose of goodwill valuation. (iv) On 1¹ April, 2015, a machine having a book value of Rs. 10,000 was sold for Rs. 11,000 but the proceeds were wrongly credited to Profit & Loss. Account. No affect has been given to rectify the same. Depreciation is charged on machine @10% p.a. on reducing balance method. Calculate the goodwill of firm on the basis of years purchase of the weighted average profit of the last four year. The appropriate weight to be used and profits are: Year 2014-15 2015-16 2016-17 2017-18 On a scrunity of the accounts, the Profit(Rs)1, 01, 0001, 24,0001, 00, 0001, 40,000 4 Weight 1 2 3 following matters are revealed: (i) On 1¹ December, 2016 a major repair was made in respect of the plant incurring Rs. 30,000 which was charged to revenue. The said sum is agreed to be capitalised for calculation subject to adjustment of depreciation of 10% p.a. on reducing balance method. (ii) The closing stock for the year 2015-16 was overvalued by Rs. 12,000 (iii) To cover management cost, an annual charge of Rs. 24,000 should be made for the purpose of goodwill valuation. (iv) On 1¹ April, 2015, a machine having a book value of Rs. 10,000 was sold for Rs. 11,000 but the proceeds were wrongly credited to Profit & Loss. Account. No affect has been given to rectify the same. Depreciation is charged on machine @10% p.a. on reducing balance method.

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Goodwill Weighted Average Profits x variety of Years Purchase weighted Average Prof... View the full answer