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    B-6 Valuation of Goodwill by p.8.88

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    Deepika. Babu
    This document calculates the value of goodwill for Mr. Ranga's business based on profits from 1986 to 1989. It first lists the annual profits, then calculates the weighted average profit over the four years as Rs. 54,040. Goodwill is determined by subtracting estimated management expenses from the average profit, then multiplying the remaining amount by three years of purchase to get the value of goodwill of Rs. 147,120.

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    B-6 Valuation of Goodwill by p.8.88

    Uploaded by

    Deepika. Babu
    2 views1 page
    This document calculates the value of goodwill for Mr. Ranga's business based on profits from 1986 to 1989. It first lists the annual profits, then calculates the weighted average profit over the four years as Rs. 54,040. Goodwill is determined by subtracting estimated management expenses from the average profit, then multiplying the remaining amount by three years of purchase to get the value of goodwill of Rs. 147,120.

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    B-6 valuation of goodwill by p.8.88 -

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    This document calculates the value of goodwill for Mr. Ranga's business based on profits from 1986 to 1989. It first lists the annual profits, then calculates the weighted average profit over the four years as Rs. 54,040. Goodwill is determined by subtracting estimated management expenses from the average profit, then multiplying the remaining amount by three years of purchase to get the value of goodwill of Rs. 147,120.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    2 views1 page

    B-6 Valuation of Goodwill by p.8.88

    Uploaded by

    Deepika. Babu
    This document calculates the value of goodwill for Mr. Ranga's business based on profits from 1986 to 1989. It first lists the annual profits, then calculates the weighted average profit over the four years as Rs. 54,040. Goodwill is determined by subtracting estimated management expenses from the average profit, then multiplying the remaining amount by three years of purchase to get the value of goodwill of Rs. 147,120.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 1

    B/6/8.

    88

    CALCULATE THE VALUE OF GOODWILL OF MR.RANGA’S

    1986 1987 1988 1989


    40,400 49,600 40,000 60,000
    - -4800 +12,000 -
    - - +4,800 -
    40,400 44,800 56,800 60,000

    YEAR PROFIT WEIGHT PRODUCT


    1986 40,400 1 40,400
    1987 44,800 2 89,600
    1988 56,800 3 1,70,400
    1989 60,000 4 2,40,000
    TOTAL 10 5,40,400

    (A) Average profit

     Weighted average profit

    =540400
    10
    =54,040
     Average profit = 54,040

    (-)Management expenses = 5,000

    49,040

    (B) Goodwill = average profit x no of years purchase

    = 49040 × 3

    = 147 120

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