Question

Calculate the goodwill of a firm on the basis of three years’ purchase of the weighted average profit of the last four years. The appropriate weights to be used and profits are:
Year
2015-16
2016-17
2017-18
2018-19

Profits (₹)
1,01,000
1,24,000
1,00,000
1,40,000

Weights
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 which was charged to revenue. The said sum is agreed 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 2016-17 was overvalued by ₹ 12,000.
(iii) To cover management cost, an annual charge of ₹ 24,000 should be made for the purpose of goodwill valuation.
(iv) On 1st April, 2016, a machine having a book value of ₹ 10,000 was sold for ₹ 11,000 but the proceeds were ​

Answer 1

He work hard but he can't get enough money.