Question

Beta Ltd. proposed to purchase the business run by Akram
31" March, 2019. Goodwill for the purpose is agreed to be valued
at three years purchase of weighted average of past four years
profit. The appropriate weights to be used and profits for these
years were:
Year Weight Profit (Rs.)
2015-16
1
20,200
2016-17
2
24,800
2017-18
3
20,000
2018-19
4
30,000
On security of accounts, the following facts were revealed :
w On 1" December, 2017, a major overhauling was made in
respect of plant incurring Rs. 6,000 which was charged to
revenue. The said amount agreed to be capitalized for goodwill
calculation subject to adjustment of yearly depreciation of
10% per annum on reducing balance method.
The Closing Stock for the year 2016-17 was overvalued by
Rs. 2,400.
To cover the management cost, an annual charges of
Rs. 4,800 should be made for purpose of valuation of
goodwill
Compute the value of goodwill of the business.​

Answer 1

Answer:

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