Question

The profits shown by Y's business for the last four years were :
Year ended
()
31st March, 2016 Profit 1,00,000
50,000)
2017 Loss 1,50,000
(includes voluntary retirement
2018 Profit 1,50,000
2019 Profit 2,00,000
Verification of books of accounts revealed the following:
(i) During the year ended 31st March, 2017, a machine got destroyed in accide-
and 60,000 was written off as loss in Profit & Loss Account.
(ii) On 1st July 2017, Two Computers costing 40,000 each were purchased ant
were debited to Travelling Expenses Account on which depreciation is to be
charged @ 10% p.a. on Straight Line Method.
Calculate the value of goodwill.
[Ans. Goodwill *1,39,000.]
goodwill is to be valued at 100% of the average annual profits of the last four years
Q. 4. X purchased the business of Y from 1st April, 2019. For this purpose
(after debiting loss of stock by fire
compensation paid $80,000)​

Answer 1

Answer:

The profits shown by Y's business for the last four years were :

Year ended

()

31st March, 2016 Profit 1,00,000

50,000)

2017 Loss 1,50,000

(includes voluntary retirement

2018 Profit 1,50,000

2019 Profit 2,00,000

Verification of books of accounts revealed the following:

(i) During the year ended 31st March, 2017, a machine got destroyed in accide-

and 60,000 was written off as loss in Profit & Loss Account.

(ii) On 1st July 2017, Two Computers costing 40,000 each were purchased ant

were debited to Travelling Expenses Account on which depreciation is to be

charged @ 10% p.a. on Straight Line Method.

Calculate the value of goodwill.

[Ans. Goodwill *1,39,000.]

goodwill is to be valued at 100% of the average annual profits of the last four years

Q. 4. X purchased the business of Y from 1st April, 2019. For this purpose

(after debiting loss of stock by fire

compensation paid $80,000

Explanation: