Question

Illustration 10. (Weighted Average Profit Method when Past Adjustments are Made)
Calculate 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:
Your Ended
31st March, 2016 31st March, 2017 31st March, 2018 31st March, 2019
40,400
49,600
40,000
60,000
Profits (1)
The weights assigned to each year ended 31st March, are: 2016-1;2017 – 2; 2018--3 and 2019-4.
You are provided with the following additional information:
0 on 31st March, 2018, a major plant repair was undertaken for 3 12,000 which was
charged to revenue. The said sum is to be capitalised for goodwill calculation subject
to adjustment of depreciation of 10% p.a. on Reducing Balance Method.
) The Closing Stock for the year ended 31st March, 2017 was overvalued by 7 4,800.
h) To cover management cost an annual charge of t 9,600 should be made for the
purpose
gocawill
of
of
I valuation​

Answer 1

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