Model: Weighted average method with adjustments Calculate the goodwill of a company on the basis of 2 years’ purchase of weighted average profits for the last 3 years. Purchase of weighted average profits for the last 3 years. 2007: Rs.1,00,000; 2008: Rs.70,000; 2009: Rs.50,000. The weights assigned to each year are: 2007: 1; 2008: 2; 2009: 3.
Further information: On 1 October 2008, repair in respect of machinery was Rs.5,000, which was charged to revenue. This is to be capitalized for goodwill calculation subject to depreciation of 10% p.a. on reducing balance method. The closing stock for the year 2007 was overvalued by Rs.3,000. To cover the management cost and annual charge, Rs.4,000 should be made for the purpose of goodwill valuation.
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
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 deadlinesOrder Paper Now