Like
Like
Like
Table showing Adjusted Profit for the last 3 years.
Year Particulars Adjustment Adjusted Profit
2014 Net Profit as per P/L A/c. 20,000
Less: Abnormal Gain (Insurance claims) (35,000) (15,000)
2015 Net Loss as per P/L A/c. (15,000)
Add: Abnormal Loss (Retirement Compensation) 1,05,000 90,000
2016 Net Profit as per P/L A/c. 75,000
Less: Abnormal Gain (Profit on sale of Fixed Assets) (30,000) 45,000
Adjusted Total Profit of Last 3 Years (1,35,000 – 15,000) 1,20,000
Average Profit =Total Profit of Last 3 Years / No of Years = 1,20,000 / 3 = 40,000
Therefore Goodwill = Average profit X No of years of Purchase
= 40,000 X 2 = Rs. 80,000
Note:
(i) Abnormal Gain (Profit) should be Subtracted from the Net Profit or Net Loss.
(ii) Abnormal Loss should be Added with the Net Profit or Net Loss.
Table showing Adjusted Profit for the last 3 years.
Year Particulars Adjustment Adjusted Profit
2014 Net Profit as per P/L A/c. 20,000
Less: Abnormal Gain (Insurance claims) (35,000) (15,000)
2015 Net Loss as per P/L A/c. (15,000)
Add: Abnormal Loss (Retirement Compensation) 1,05,000 90,000
2016 Net Profit as per P/L A/c. 75,000
Less: Abnormal Gain (Profit on sale of Fixed Assets) (30,000) 45,000
Adjusted Total Profit of Last 3 Years (1,35,000 – 15,000) 1,20,000
Average Profit =Total Profit of Last 3 Years / No of Years = 1,20,000 / 3 = 40,000
Therefore Goodwill = Average profit X No of years of Purchase
= 40,000 X 2 = Rs. 80,000
Note:
(i) Abnormal Gain (Profit) should be Subtracted from the Net Profit or Net Loss.
(ii) Abnormal Loss should be Added with the Net Profit or Net Loss.
Table showing Adjusted Profit for the last 3 years.
Year Particulars Adjustment Adjusted Profit
2014 Net Profit as per P/L A/c. 20,000
Less: Abnormal Gain (Insurance claims) (35,000) (15,000)
2015 Net Loss as per P/L A/c. (15,000)
Add: Abnormal Loss (Retirement Compensation) 1,05,000 90,000
2016 Net Profit as per P/L A/c. 75,000
Less: Abnormal Gain (Profit on sale of Fixed Assets) (30,000) 45,000
Adjusted Total Profit of Last 3 Years (1,35,000 – 15,000) 1,20,000
Average Profit =Total Profit of Last 3 Years / No of Years = 1,20,000 / 3 = 40,000
Therefore Goodwill = Average profit X No of years of Purchase
= 40,000 X 2 = Rs. 80,000
Note:
(i) Abnormal Gain (Profit) should be Subtracted from the Net Profit or Net Loss.
(ii) Abnormal Loss should be Added with the Net Profit or Net Loss.
Table showing Adjusted Profit for the last 3 years.
Year Particulars Adjustment Adjusted Profit
2014 Net Profit as per P/L A/c. 20,000
Less: Abnormal Gain (Insurance claims) (35,000) (15,000)
2015 Net Loss as per P/L A/c. (15,000)
Add: Abnormal Loss (Retirement Compensation) 1,05,000 90,000
2016 Net Profit as per P/L A/c. 75,000
Less: Abnormal Gain (Profit on sale of Fixed Assets) (30,000) 45,000
Adjusted Total Profit of Last 3 Years (1,35,000 – 15,000) 1,20,000
Average Profit =Total Profit of Last 3 Years / No of Years = 1,20,000 / 3 = 40,000
Therefore Goodwill = Average profit X No of years of Purchase
= 40,000 X 2 = Rs. 80,000
Note:
(i) Abnormal Gain (Profit) should be Subtracted from the Net Profit or Net Loss.
(ii) Abnormal Loss should be Added with the Net Profit or Net Loss.
Avg profit= Total Profit/no of years
=120000/3
=40000
Good will= Avg profit*no of years purchase
=40000*2
=80000
Get 5 credit points for each correct answer. The best one gets 25 in all.
