I have a doubt. While valuing goodwill, I see sometimes we use average capital employed & sometimes closing capital employed. Please explain as to how should we decide if we have to use Average capital employed or closing capital employed other than a case where it is specifically given in the question or a case where opening and closing capitals both are given.
Menu
Valuation of goodwill
Replies (2)
We need to consider average capital only if in question opening capital details is not available then we will take the assumption that closing & opening capital are same.
There are 3 situations to consider Average Capital employed
1. Where it is specifically asked in the Question
2. Where information about Opening Capital & Closing Capital is given in the problem.
3. Where Future Maintainable Profit (FMP) is calculated based on Weighted Average of past profits & corrections are required for Capital Employed.
1. Where it is specifically asked in the Question
2. Where information about Opening Capital & Closing Capital is given in the problem.
3. Where Future Maintainable Profit (FMP) is calculated based on Weighted Average of past profits & corrections are required for Capital Employed.
Recent Threads
- GST REGISTRATION FOR CARPENTER WORK
- Standard deduction for family pensioners
- Concerning tax savings or understanding the long-t
- F&O losses
- Is form 10 IE needed in this case?
- TDS on purchase of property more than 50 lakhs
- Withdrawal from post NSS
- Section 10(11) or 10(12) of exempted income
- New income tax act
- Duplication of Interest on SCSS deposits in postof
Related Threads
CAclubindia
