when we are calculating goodwill of a company, we calculate capital employed for determining normal profit.
normally we use average capital employed but some time we use closing capital employed.
in which situation we use closing capital employed??
Menu
calculation of capital employed
Replies (1)
Average capital employed = (Opening capital emploted + Closing Capital employed) / 2
= Opening capital employed + (Current year profit after Tax) X 50%
= Closing capital employed - (Current year profit after Tax) X 50%
Current year profit = Changes in reserves and surplus
Average capital employed cannot be calculated in the absensce of details about profits for the current year. Since current year profits has not been given in the question, Goodwill has been calculated on the basis of closing capital employed
Recent Topics :
- Discrepancy in Auto populated figures in GSTR1 of
- What should I do after receiving a GST Show Cause
- Discuss and Download CA Inter Question Paper Septe
- Hi experts needed some help
- Gift of Immovable Property u/s 92 of Income Tax Ac
- NSE BSE Pre-open session changes from 7 September
- Financial statements for non corporate entities
- Hi experts need some help
- Is SAP FICO a good career option for finance and a
- Direct Cost booking
Related Topics :
CAclubindia
