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Disagree with u sneha in this regard one cant use weighted average method eventhough that option is given because the increasing trend is nt steady we need a steady increasing trend to use weighted average
Originally posted by : Sunshine... |
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in the year 00-01 the opening stock and closing stock both are overvalued-- so make the adjustments accordingly... yes u are correct that u have to use weighted average method in case profits show an increasing trend....u can use that method and get the answer as goodwill = 21900 if this option is provided then that will be correct ... if u just got option of 17700 then u got no other choice right...!! Regards |
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A/c doubt plz help
Replies (19)
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Disagree with u sneha in this regard one cant use weighted average method eventhough that option is given because the increasing trend is nt steady we need a steady increasing trend to use weighted average
Originally posted by : Sunshine... |
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in the year 00-01 the opening stock and closing stock both are overvalued-- so make the adjustments accordingly... yes u are correct that u have to use weighted average method in case profits show an increasing trend....u can use that method and get the answer as goodwill = 21900 if this option is provided then that will be correct ... if u just got option of 17700 then u got no other choice right...!! Regards |
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Thank u vijay i got my mistake..i misread the number of shares actually issued...thanks for the correction...
but in case of increasing trend i still dont agree.. as far as what i have studied we need to use the weighted average method in case of increasing trends.....a steady rate is not practically possible......there has to be some fluctuation...i think we can deal with this problem using logic...........or did u read it in some book???i told what i learnt.......
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I also haven't referred to any book, but as far as i remember my CPT here the increase in profit is 1000% instantly & later on the rate is around 15%. Steady in the sense not exactly eual but say 50-100% or say here 15-25%. Still u might be right, I need to confirm from my Mihir Sir, wiil tell u later on.
Originally posted by : Sunshine... |
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Thank u vijay i got my mistake..i misread the number of shares actually issued...thanks for the correction... but in case of increasing trend i still dont agree.. as far as what i have studied we need to use the weighted average method in case of increasing trends.....a steady rate is not practically possible......there has to be some fluctuation...i think we can deal with this problem using logic...........or did u read it in some book???i told what i learnt....... |
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Thank u vry much for solvin my problems
adjustedprofits will be-
1998-99 = 2000
99-00 26100-2200= 23900
00-01 31200+2200-6200= 27200
now take the weighted avg of profits = 2000*1+23900*2+2720*3 =29867
6
alternatively u can take simple avg.
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