Why Voluntary retirement compensation paid is added to loss of the firm while calculating average profit
Answers
Answer:
Voluntary retirement is the form of retirement that takes place prior to the actual age of retirement, i.e., 60 years.
It takes place due to certain causes like poor health, a weird condition of the company and many more.
If inferred in detail, it is an abnormal loss.
The reason is that though you will be getting your entire money in bulk, you will not be able to manage it properly.
In a regular income, it is possible to plan your expenditure at the best.
Answer:
Its and abnormal Loss !!!!! So far Not a Charge !!
Explanation:
If you (most probably you would be a Class 12 student ) , might have got confused ..... thats totally fine as -
it is confusing and contradicting
So while adjusting Profits for , Goodwill valuation
we Subtract All the Charges like
CHARGE -
1. Depreciation
2.Employee Remittance
3.Managemnet Charge
etc all these are charges you will come across in the questions
VOLUNTARY RETIREMNET COMPENSATION
seems to be a charge !!!
as it is in a way !
but it is treated as an ABNORMAL LOSS !!!
and abnormal loss are added back to the profits
for refrence You can solve
QUESTION NO. 37 from DK GOEL
chapter Admission
