Manbir and Nimrat are partners and they admit Anahat into partnership.
It was
agreed to
value goodwill at three years’ purchase on Weighted Average Profit Method taking
profits of the
last five years. Weights assigned to each year as 1, 2, 3, 4 and 5 respectively to
profits for the
year ended 31st March, 2015 to 2019. The profits for these years were: ₹ 70,000, ₹
1, 40,000, ₹
1, 00,000, ₹ 1, 60,000 and ₹ 1, 65,000 respectively.
Scrutiny of books of account revealed following information:
(i) There was an abnormal loss of ₹ 20,000 in the year ended 31st March, 2015.
(ii) There was an abnormal gain (profit) of ₹ 30,000 in the year ended 31st March,
2016.
(iii) Closing Stock as on 31st March, 2018 was overvalued by ₹ 10,000.
Calculate the value of goodwill.
Calculate the goodwill of a firm on the basis of three years’ purchase of the
Weighted Average
Profit of the last four years. The profits of the last four financial years ended
31st March, were:
2016 − ₹ 25,000; 2017 − ₹ 27,000; 2018 − ₹ 46,900 and 2019 − ₹ 53,810. The weights
assigned
to each year are 2016 − 1; 2017 − 2; 2018 − 3; 2019 − 4. You are supplied the
following
information:
(i) On 1st April, 2016, a major plant repair was undertaken for ₹ 10,000 which was
charged to
revenue. The said sum is to be capitalised for goodwill calculation subject to
adjustment of
depreciation of 10% on Reducing Balance Method.
(ii) The Closing Stock for the years ended 31st March, 2017 and 2018 were
overvalued by ₹
1,000 and ₹ 2,000 respectively.
(iii) To cover management costs an annual charge of ₹ 5,000 should be made for the
purpose of
goodwill valuation.
Anita and Anaya are partners sharing profits in the ratio of 3 : 2. They admit
Ashna into partnership. It was agreed to value goodwill at three year’s purchase on
the basis of weighted average profit for the past 5 years. Weights being assigned
to each year were:-
The profits of 5 years were:-
Year ended Profits
31st March, 2015 1,80,000
31st March, 2016 1,60,000
31st March, 2017 2,50,000
31st March, 2018 3,00,000
31st March, 2019 3,50,000
Book revealed:
An abnormal gain of Rs. 20,000 was earned in the year ended 31st March, 2016.
An abnormal loss of Rs. 10,000 was incurred in the year ended 31st March, 2017.
Expense of 50,000 incurred to overhaul a machine on 1st April, 2017 was debited to
profit and loss account instead of being debited to machinery account. Depreciation
is charged on machinery @20% on written down value method.
Closing stock as on 31st March 2018 was undervalued by Rs. 20,000.
Calculate the value of goodwill.
Luve and Kush are partners sharing profits equally. They admit Shubh into
partnership for equal share. Goodwill was agreed to be valued at two years'
purchase of average profit of last four years. Profits for the last four years
were:
Year EndedNormal Profit/(Loss) (Rs.)31st March, 201670,000,31st March,
20171,00,000,31st March, 201855,000(Loss),31st March, 20191,45,000.
The books of Account of the firm revealed as follows:
1. Firm had abnormal gain of Rs. 10,000 during the year ended 31st March, 2016.
2. Firm incurred abnormal loss of Rs. 20,000 during the year ended 31st March,
2017.
3. Repairs to car amounting to Rs. 50,000 was wrongly debited to vehicles on 1st
May, 2017.
Depreciation was charged on vehicles @10% on Straight Line Method.
Calculate the value of Goodwill.
ANSWER ; 115000
Weighted Average Profit Method when Past adjustments are Made )
Calculate goodwill of the firm on the basis of three years' purchase of weighted
average profit of the last four years. Profits of these four years ended 31st March
were:
(Weighted Average Profit Method when Past adjustments are Made ) Calculate
goodwill of the firm on the basis of three years' purchase of weighted average
profit of the last four years. Profits of these four years ended 31st March were:
The weights assigned to each year 31st March, are: 2016 - 1, 2017 - 2, 2018 - 3 and
2019 - 4. You are provided with the following additional information: (i) On
31st March, 2018, a major plant repair was undertaken for Rs. 12,000 which was
charged to revenue. The said sum is to be capitalised for goodwill calculation
subject to adjustment of depreciation of 10% p.a. on Reducing Balance. Method.
(ii) The Closing Stock for the year ended 31st March, 2017 was overvalued by Rs.
4,800. (iii) To cover management cost an annual charge of Rs. 9,600 should be
made for the purpose of goodwill valuation.
The weights assigned to each year 31st March, are: 2016 - 1, 2017 - 2, 2018 - 3 and
2019 - 4.
You are provided with the following additional information:
(i) On 31st March, 2018, a major plant repair was undertaken for Rs. 12,000 which
was charged to revenue. The said sum is to be capitalised for goodwill calculation
subject to adjustment of depreciation of
10
%
p.a. on Reducing Balance. Method.
(ii) The Closing Stock for the year ended 31st March, 2017 was overvalued by Rs.
4,800.
(iii) To cover management cost an annual charge of Rs. 9,600 should be made for the
purpose of goodwill valuation.
ANSWER : 439600/10
43960*3
131880
