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Goodwill is to be valued at …

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Goodwill is to be valued at 3 years' purchase of average profits of 3 years upto the date of valuation after deducting interest @ 6% on capital employed and a fair remuneration to each partner. The profits are assumed to be earned evenly throughout the year. Fair remuneration for the work done by each partner is 18,000 per annum and total capital employed is? 1,80,000. The trading profits (before charging interest on Capital employed and remuneration of partners) were 2013 * 65,000 2014 75,000; 201580000 : 2016 62,000. Calculate value of goodwill of a firm as on 30.6.2016. The firm is having three partners

Posted by Nikita Kamboj 5 years, 4 months ago

CBSE > Class 12 > Accountancy

1 answers

Hetal Surana 5 years, 4 months ago

The value of goodwill is 1,95,250 As Avg. Profit =(75,000+80,000+62000)÷3×3 =217000 - this is g/w till 31st march 2016 217000×3÷12=54250 217000+54250=271250 - this is g/w till 30.6.16 without adjustment 180000×6%=10800 - interest on cap. Remuneration of the 3 partners till 30.6.16 = 18000+(18000×3÷12) =67500 G/w after adjustment =271250-10800-67500 =195250

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