Question

Goodwill: Concept and Mode of Valuation 2.35 Weighted Average Profit Method when Past Adjustments are Made 13. Calculate goodwill of a firm on the basis of three years' purchase of the Weighted Average Profit of the last four 246,900 and 2021–3 53,810. The weights assigned to each year are: 2018—1;2019—2; 2020—3; 2021-4. years. The profits of the last four financial years ended 31st March, were: 2018–25,000;2019% 27,000; 2020— You are supplied the following information: On 1st April, 2018, a major plant repair was undertaken for 10,000 which improved the quality of the product. It was charged to revenue instead of being capitalised. Depreciation @ 10% p.a. on Reducing Balance Method was to be provided. c) The Closing Stock for the years ended 31st March, 2019 and 2020 were overvalued by * 1,000 and *2,000 respectively. c) To cover management cost an annual charge of 5,000 should be made for the purpose of goodwill valuation​

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