Accountancy, asked by manoharanmsi4589, 2 months ago

goodwill is to be valued at two years purchase of 3 years normal average profit of the firm .The profit for 2014-15, ₹20000(including insurance claim received of ₹40000).The loss for 2015-16 ,₹8000 (includin voluntary retirement compensation paid ₹110000 ) .The profit for 2016-17 ,₹105000(including profit of ₹25000 on the sale of a fixed asset . calculate the value of goodwill by average profit method.

Answers

Answered by tejasgupta
70

Answer:

Goodwill = Rs. 1,08,000

Explanation:

For the year 2014-15, profit = Rs. 20,000

Less: Abnormal Income, ie insurance claim received = Rs. 40,000

This means, normal profit for the year 2014-15 is loss of Rs. 20,000.

Loss for 2015-16, loss = Rs, 8,000

Add: Abnormal expense, ie voluntary retirement compensation = Rs. 1,10,000

This means, normal profit for 2015-16, is Rs. 1,02,000.

For the year 2016-17, profit = Rs. 1,05,000

Less: Abnormal Gain, ie gain on sale of fixed asset = Rs. 25,000

This means, normal profit for 2016-17 is Rs. 80,000.

Therefore, Average profit for 3 years, ie 2014-15, 15-16 and 16-17, is

\dfrac{-20,000 + 1,02,000 + 80,000}{3}\\\\\\= \dfrac{1,62,000}{3}\\\\\\= \boxed{\bold{54,000}}

It is given that number of years purchase = 2 years.

Hence, Goodwill = No. of years purchase * Avg Profit for 3 yrs

Goodwill = 2*54,000 = Rs. 1,08,000

Answered by Itzheartcracer
41

Given :-

Good will is to be valued at two years purchase of 3 years normal average profit of the firm .The profit for 2014-15, ₹20000(including insurance claim received of ₹40000).The loss for 2015-16 ,₹8000 (includin voluntary retirement compensation paid ₹110000 ) .The profit for 2016-17 ,₹105000(including profit of ₹25000 on the sale of a fixed asset .

To Find :-

Value of goodwill by average profit method

Solution :-

Year 2014-15

Profit = 40,000 - 20,000

Profit = 20,000

Year 2015-16

Profit = 110000 - 8000

Profit =  1,02,000.

Year 2016-17

Profit = 105000 - 25000

Profit = 80000

Avg. profit = 102000 + 80000 - 20000/3

Avg. profit = 182000 - 20000/3

Avg. profit = 162000/3

Avg. profit = 54000

Goodwill =  1,08,000

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