Valuevation of goodwill

the premium for goodwill to be valued on the basis of two years purchase of last three years avarage profits stated below

08-09 rs 10000

09-10 rs 12000

10-11 rs 15000

last three books of account to be rectified and discrepancies if any found therin to be adjusted

  • 08-09 - Bad debt previously written off and recovered rs 800/- credited to the debtors account . closing stock under valued by 2500/-
  • 09-10 - furniture purchased ra 600/- debited to purchase account . depreciation at 10% on reduceing balanceing method is chargeable. clseing stock overstated bu rs 4000/-
  • 10-11 - A purchase invoice of rs 2001/- was omitted from the book. closing stock under valued by 2000/-

pls give me correct profits and good will value

 

Replies (1)

Correct Profits calculated as follows:

 

  08-09 09-10 10-11
Profits 10000 12000 15000
bad Debts recovered 800    
closing stock undervalued 2500    
Opening stock under valued   -2500  
Furniture Purchased   600  
Deprn on furn   -60 -54
closing stock overrvalued   -4000  
Opening stock over valued     4000
Purchase Inv Omission     -2001
closing stock undervalued     2000
       
correct Profits 13300 6040 18945

Average profits for last three years Rs 12,762

therefore GW @ 2years purchase is Rs.25,523

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