25. Compute the value of Goodwill of a firm on the basis of 2 years purchase of the weighted average
profits of last 4 years.
The profits of last 4 years were : 2016 28,000, 2017 * 34,000 ; 2018 ? 32,000; 2019 45,000. The weights
assigned were 1, 2, 3 and 4.
Following informaiton is supplied to you:
(1) In 2018, a major repair was made in plant and machinery incurring 18,000 on 1st July which was
charged to revenue. The said sum is agreed to be capitalised for goodwill computation subject to
depreciation @ 10% per annum on reducing balance method.
(ii) The closing stock of 2017 was overvalued by 4,000.
26. Mr. Santharam proposes to purchase the business carried on by Mr Somnrakash Goodwill in ulud
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