X purchased the business of Y from 1st April, 2019. For this purpose
goodwill is to be valued at 100% of the average annual profits of the last four years.
The profits shown by Y's business for the last four years were :
Year ended
31st March, 2016 Profit 1,00,000 (after debiting loss of stock by fire
350,000)
2017 Loss 1.50,000 (includes voluntary retirement
compensation paid 80,000)
2018 Profit 1,50,000
2019 Profit 2,00,000
Verification of books of accounts revealed the following:
(1) During the year ended 31st March, 2017, a machine got destroyed in accident
and 60,000 was written off as loss in Profit & Loss Account
(ii) On 1st July 2017. Two Computers costing 340,000 each were purchased and
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.
Answers
Answered by
7
Answer :
Goodwill Rs. 1,39,000
Solution :
Profit for the year ended 31 st March 2018 Rs. 2,24,000 and for 2019 Rs. 1,92,000.
Hope it's helpful dear
Similar questions