Question

Calculate the goodwill of the firm on the basis of three years' purchase of the weighted average profit of the last four years. Profits of these four years ended 31st March,were : Year ended 31st March,2018 31st March,2019 31st March,2020 31st March, 2021 Profits (Rs) 40,400 49,600 40,000 60,000 The weights assigned to each year ended 31 st March, are 2018- 1; 2019 -2; 2020 - 3 and 2021 - 4. You are provided with the following additional information : a) On 1st April, 2020, a major plant repair was carried out for Rs 12,000 which increased its production capacity. It was debited to profit and loss account for the year instead of being capitalised. Depreciation at the rate 10% per annum on reducing balance method was to be charged. b) Closing stock for the year ended 31st March, 2019 was overvalued by Rs 4,800. c)To cover management cost an annual charge of Rs 9,600 should be
made​

Answer 1

Answer:

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Explanation:

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