1.

The capital employed as shown by the books of ABC Ltd is Rs 5,00,00,000. And the normal rate of return is 10 %. Goodwill is to be calculated on the basis of 3 years purchase of super profits of the last four years. Profits for the last four years are: Year Profit/Loss (Rs) 2005 - Rs. 1,00,00,000 2006 - Rs. 1,22,50,000 2007 - Rs. 74,50,000 2008 - Rs. 54,00,000 Calculate goodwill.

Answer»

The capital employed as shown by the books of ABC Ltd is Rs 5,00,00,000. And the normal rate of return is 10 %. Goodwill is to be calculated on the basis of 3 years purchase of super profits of the last four years. Profits for the last four years are:

Year Profit/Loss (Rs)

2005 - Rs. 1,00,00,000

2006 - Rs. 1,22,50,000

2007 - Rs. 74,50,000

2008 - Rs. 54,00,000

Calculate goodwill.




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