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प्रश्न
Manbir and Nimrat are partners and they admit Anahat into partnership. It was agreed to value goodwill at three years' purchase on Weighted Average Profit Method taking profits of last five years. Weights assigned to each year as 1, 2, 3, 4 and 5 respectively to profits for the year ended 31st March, 2015 to 2019. The profits for these years were: ₹ 70,000, ₹ 1,40,000, ₹ 1,00,000, ₹ 1,60,000 and ₹ 1,65,000 respectively.
Scrutiny of books of account revealed following information:
(i) There was an abnormal loss of ₹ 20,000 in the year ended 31st March, 2015.
(ii) There was an abnormal gain (profit) of ₹ 30,000 in the year ended 31st March, 2016.
(iii) Closing Stock as on 31st March, 2018 was overvalued by ₹ 10,000.
Calculate the value of goodwill.
उत्तर
Goodwill = Weighted Average Profit x No. of Years' Purchase
= 1,39,000 x 3 = Rs. 4,17,000
Working Notes:
WN: 1 Calculation of Normal Profits:
|
Year |
Profit/(Loss) (₹) |
Adjustment |
Normal Profit (₹) |
|
31 March, 2015 |
70,000 |
20,000 |
90,000 |
|
31 March, 2016 |
1,40,000 |
(30,000) |
1,10,000 |
|
31 March, 2017 |
1,00,000 |
- |
1,00,000 |
|
31 March, 2018 |
1,60,000 |
(10,000) |
1,50,000 |
|
31 March, 2019 |
1,65,000 |
10,000 |
1,75,000 |
WN: 2 Calculations of Weighted Average Profits:
|
Year |
Normal Profit |
Weight |
Product |
|
31 March, 2015 |
90,000 |
1 |
90,000 |
|
31 March, 2016 |
1,10,000 |
2 |
2,20,000 |
|
31 March, 2017 |
1,00,000 |
3 |
3,00,000 |
|
31 March, 2018 |
1,50,000 |
4 |
6,00,000 |
|
31 March, 2019 |
1,75,000 |
5 |
8,75,000 |
|
Total |
|
15 |
20,85,000 |
Weighted Average Profit = `"Total of Profit Product"/"Total of Weights"`
= `[20,85,000]/15`
= Rs. 1,39,000.
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संबंधित प्रश्न
Compute the value of goodwill on the basis of four years’ purchase of the average profits based on the last five years? The profits for the last five years were as follows:
| Rs. | |
| 2013 | 40,000 |
| 2014 | 50,000 |
| 2015 | 60,000 |
| 2016 | 50,000 |
| 2017 | 60,000 |
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| Year | 2014-15 | 2015-16 | 2016-17 | 2017-18 | 2018-19 |
| Profits (₹) | 14,000 | 15,500 | 10,000 | 16,000 | 15,000 |
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| Weights | 1 | 2 | 3 | 4 |
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| Liabilities |
Amount (₹) |
Assets | Amount (₹) |
|
| Capital A/cs: | Furniture | 4,00,000 | ||
| Varuna | 5,00,000 | Computers | 3,00,000 | |
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| Long-term Loan | 5,50,000 | Investments (Trade) | 2,00,000 | |
| Sundry Creditors | 2,00,000 | Stock | 3,00,000 | |
| Outstanding Expenses | 50,000 | Sundry Debtors | 3,00,000 | |
| Advances from Customers | 1,50,000 | Bills Receivable | 50,000 | |
| Cash in Hand | 50,000 | |||
| Cash at Bank | 2,00,000 | |||
| Deferred Revenue Expenditure: | ||||
| Advertisement Suspense | 50,000 | |||
| 19,50,000 | 19,50,000 | |||
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What is the need for the valuation of goodwill?
The profit for the last five years of a firm was as follows - the year 2002 Rs. 4,00,000; year 2003 Rs. 3,98,000; year 2004 Rs. 4,50,000; year 2005 Rs. 4,45,000 and year 2006 Rs. 5,00,000. Calculate goodwill of the firm on the basis of 4 years purchase of 5 years average profits.
Identify the formula for calculating goodwill with the help of the Average Profit Method.
