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From the following information ofNairutva and Rutvik's firm determine the value of goodwill of partnership firm on the basis ofcapitalisation of Weighted Average Profit Method.Year Profit (₹)2012-'13 45,0002013-'14 50,0002014-'15 65,0002015-'16 75,0002016-'17 90,000Additional information :(1) Business assets : ₹6,00,000(2) Business liabilities: ₹1,70,000(3) Normal expected return of business is 10%.plz give me the answer as fast as possibleMAY DEAR ❤️ |
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Answer» Answer: Explanation: CALCULATION of weighted profits : Since the profits are DISPLAYING an increasing trend , weighted average method are used to value goodwill Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 Profits earned 45,000 50,000 65,000 75,000 90,000 Weights 1 2 3 4 5 Weighted profit 45,000 1,00,000 1,95,00 3,00,000 4,50,000 Weighted Average profit = sum of weighted profits / Total of weights = 10,90,000 / 15 = 72667 Capital of firm = Assets - liabilities = 6,00,000 - 1,70,000 = 4,30,000 Value of the firm = 72667 / 10 x 100 = 7,26,670 Value of goodwill = 7,26,670 - 4,30,000 = RS 2,96,670 |
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