Tarang purchased Jyoti’s business with effect from 1st April 2023. Profits shown by Jyoti’s Business for the last three financial years ended 31st March were:
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Madhu and Vidhi are partners sharing profits in the ratio of 3 : 2. They decided to admit Manu as a partner from 1st April 2023 on the following terms:
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Asin and Shreyas were partners sharing profits and losses in a ratio of 2 : 1. They admitted Shyam as a partner for 1/5th share in profits. For this purpose, the Goodwill of the firm was to be valued on the basis of three years’ purchase of the last five years’ average profit. Profits for the last five years ended 31st March were:
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Purav and Purvi are partners in a firm sharing profits and losses in a ratio of 2 : 1. They admit Parv into a partnership for 1/4th share on 1st April 2023. For this purpose, goodwill is to be valued at four times the average annual profit of the previous four or five years, whichever is higher.
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Annu, Baby, and Chetan are partners in a firm sharing profits and losses equally. They take Deep into partnership from 1st April 2023 for 1/5th share in the future profits.
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Profits for the five years ending 31st March are as follows: Year 2019 – ₹ 4,00,000; Year 2020 – ₹ 3,98,000; Year 2021 – ₹ 4,50,000; Year 2022 – ₹ 4,45,000 and Year 2023 – ₹ 5,00,000. Calculate the goodwill of the firm on the basis of 4 Years’ purchase of 5 years’ average profit.
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Goodwill is to be valued at three years’ purchase of four years’ average profit. Profits of the firm for the last four years ending 31st March were: 2020 – ₹ 12,000, 2021 – ₹ 18,000; 2022 – ₹ 16,000; 2023 – ₹ 14,000. Calculate the amount of Goodwill
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Arrange the following steps involved for the Valuation of Goodwill by Average Profit Method:
Ans – d) Explanation:- First Correct normal profit is calculated after adjusting abnormalities Total profits is calculated The average Profit is calculated Goodwill is calculated
Total of Assets side of the Balance Sheet – ₹ 25,00,000, Debit Balances in Current Account of Naresh and Vikesh – ₹ 75,000 and ₹ 25,000 respectively; Bank Loan ₹ 8,00,000; Goodwill ₹ 1,00,000; Trade Investments – ₹ 25,000; Profit and Loss Accounts (Debit) – ₹ 15,000.
Ans – d) Explanation:- Capital Employed = Total Assets – Goodwill – Profit and Loss Account (Dr) Balance – Bank Loan – Debit balances of partner’s Current Account Capital Employed = ₹ 25,00,000 – ₹ 1,00,000 – ₹ 15,000 –…
Capital Accounts of Partners Naresh and Vikesh – ₹ 5,00,000 each; Balances in Current Accounts of Naresh and Vikesh – ₹ 50,000 and ₹ 40,000 respectively; Bank Loan – ₹ 10,00,000; Goodwill ₹ 50,000; Investments – ₹ 25,000; Advertisement Suspense – ₹ 15,000. Based on the above information, Capital Employed for the purposes of the valuation of Goodwill will be
Ans – c) Explanation:- Capital Employed = Partner’s Capital + Partner’s Current account Balances – Goodwill – Investments – Advertisement Suspense Capital Employed = 5,00,000 + 5,00,000 + 50,000 + 40,000 – 50,000 – 25,000 – 15,000 Capital Employed =…