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. P, Q and R are running a partnership business and with equal ratio and soon they plan on changing the ratio to 3:2:1. This requires calculation of goodwill for the adjustment of premium on goodwill. Goodwill is to be calculated on 3 years purchase of Super Profit. Total Assets of the firm are Rs. 2350000 and outside liabilities are Rs. 650000. Normal Rate of Return prevailing in the industry is 10 %. Calculation of the Average profit is to be done from the following corrected profits: Year Profit Adjustment 2015 350000 After including profit in sale of Land Rs. 50000. 2016 320000 Over valuation of Closing Stock by Rs. 20000. 2017 330000 |
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