Question

20. Calculate the goodwill of a firm on the basis of three years' purchase of the weighted average profito
the last four years. The appropriate weights to be used and profits are:
Year
2015-16
2016-17
2017-18
2018-19
1,24,000
1,00,000
1,40,000
Profits (5)
Weights
1,01,000
1
2
3
4
On a scrutiny of the accounts, the following matters are revealed:
(i) On 1st December, 2017, a major repair was made in respect of the plant incurring * 30,000 whic
was charged to revenue. The said sum is agreed to be capitalised for goodwill calculation subje
to adjustment of depreciation of 10% p.a. on Reducing Balance Method.
(ii) The closing stock for the year 2016-17 was overvalued by 12,000.
(iii) To cover management cost, an annual charge of 24,000 should be made for the purpose
goodwill valuation,
(iv) On 1st April, 2016, a machine having a book value of 10,000 was sold for 11,000 but the procee
were wrongly credited to Profit and Loss Account. No effect has been given to rectify the sar
Depreciation is charged on machine @ 10% p.a. on reducing balance method.
[Ans.: Value of Goodwill-3,12,70
Profit​

Answer 1

Answer:

which chapter question u ask ?