Q. X sold his business to Y .  Calculate the value of the Goodwill taking in the consideration the following factors : 
(i)  Goodwill is valued at three years purchase of the average profits of the last four years . Profit of the last four years  were as : year 2009 --- Rs. 40,000, year  2010 --- Rs. 58,000, year 2011 --- Rs. 53,000, year 2012 --- Rs. 62,000.
(ii) Abnormal loss of Rs. 2000 due to theft has  reduced the profits of the year 2009.
(iii) Profits for the year 2010 include abnormal profit of Rs. 4,000.
(iv) A speculative and lottery profit of Rs. 5,000 was received during the year 2011 which was included in that year's profit.
‚Äč(v) Profits of the year 2012 were reduced by Rs. 10,000 on such a machinery which was destroyed by fire during the year.

Please find this answer

  • 8
Please find this answer

  • 4
AP - Average Profit TP - Total Profit

  • 0
What are you looking for?