It is provided in the Articles of Association that on the death of a shareholder, his shares shall…

It is provided in the Articles of Association that on the death of a shareholder, his shares shall be purchased by the remaining shareholders at a price to be settled by the Auditors, on the basis of the last balance sheet.

It is further provided that for this purpose, goodwill was to be of the value of three years’ purchase of the average annual profits for the last four years. The last balance sheet is as follows:

Liabilities

Save your time - order a paper!

Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines

Order Paper Now

Rs

Assets

Rs

Capital

 

Goodwill

1,00,000

20,000 shares of Rs.10

 

Investment at cost

 

each fully paid

2,00,000

(market value

 

Reserve

1,00,000

Rs.1,25,000)

1,50,000

Debentures

2,00,000

Stock at cost

2,50,000

Sundry creditors

1,50,000

Debtors

1,50,000

Profit and Loss Account

35,000

Cash

35,000

 

6,85,000

 

6,85,000

The profits for the last four years were (after tax) Rs.15,000, 20,000, 25,000 and 40,000 respectively.

You are required to state with details of working the price which should be paid per share.

 

 

Looking for a Similar Assignment? Let us take care of your classwork while you enjoy your free time! All papers are written from scratch and are 100% Original. Try us today! Use Code FREE15