Varuna and Karuna are partners for equal shares. They admit Lata into partnership for 1/4th share. It was agreed to value goodwill of the firm at 4 year’s purchase of super profit
Varuna and Karuna are partners for equal shares. They admit Lata into partnership for 1/4th share. It was agreed to value goodwill of the firm at 4 year’s purchase of super profit. Normal rate of return is 15% of the capital employed. Average profit of the firm is ₹ 4,00,000. Balance Sheet of the firm as at 31st March, 2023 was as follows:
| Liabilities | ₹ | Assets | ₹ |
| Capital A/cs:
Varuna Karuna Reserves and Surplus Sundry Creditors Outstanding Expenses Advances from Customers |
5,00,000
5,00,000 2,00,000 50,000 1,50,000 |
Furniture
Computers Electrical Fittings Investments (Trade) Stock Sundry Debtors Bills Receivable Cash at bank Cash in Hand Deferred Revenue Expenditure: Advertisement Suspense |
4,00,000
3,00,000 1,00,000 2,00,000 3,00,000 3,00,000 50,000 2,00,000 50,000 |
| 19,50,000 | 19,50,000 |
Calculate the value of goodwill.
Anurag Pathak Changed status to publish May 3, 2024
