Subjective Questions on Sumit purchased Amit 39 s business on 1st April 2019 Goodwill was decided to be valued at two years ........... for Commerce 12th Preparation

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Subjective Questions

Sumit purchased Amit 39 s business on 1st April 2019 Goodwill was decided to be valued at two years ...........

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    Sumit purchased Amit's business on 1st April, 2019. Goodwill was decided to be valued at two years' purchase of average normal profit of last four years. The profits for the past four years were:

    Year Ended 31st March, 2016 31st March, 2017 31st March, 2018 31st March, 2019
    Profits (Rs) 80,000 1,45,000 1,60,000 2,00,000

    Books of Account revealed that:

    (i) Abnormal loss of Rs 20,000 was debited to Profit and Loss Account for the year ended 31st March, 2016.       (3 marks)

    (ii) A fixed asset was sold in the year ended 31st March, 2017 and gain (profit) of Rs 25,000 was credited to Profit and Loss Account.

    (iii) In the year ended 31st March, 2018 assets of the firm were not insured due to oversight. Insurance premium not paid was Rs 15,000.

    Calculate the value of goodwill.

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