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The profit of a firmfor the last 5 years amounted to 9000 12000-15000 13000 and 10000 respectively the value of goodwill is to be calculated at 3 years purchase of weighted average profit weight are to be assigned 5432 and 1 respectively find out the value of goodwill. solution?
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The profit of a firmfor the last 5 years amounted to 9000 12000-15000 ...
Calculation of Goodwill Value
Step 1: Calculate Weighted Average Profit
To calculate the weighted average profit, we need to multiply each year's profit by its weight and then add them together, and then divide by the sum of the weights.
Weighted Average Profit = ((9000 x 5) + (12000 x 4) + (15000 x 3) + (13000 x 2) + (10000 x 1)) / (5 + 4 + 3 + 2 + 1)
Weighted Average Profit = 11850
Step 2: Calculate Goodwill Value
Goodwill Value = Weighted Average Profit x 3
Goodwill Value = 11850 x 3
Goodwill Value = 35550
Explanation
Goodwill is an intangible asset that represents the value of a business above its tangible assets and liabilities. To calculate the goodwill value, we need to use the weighted average profit method. This method takes into account the profits of the last few years and assigns weights to them based on their importance. In this case, we have used weights of 5, 4, 3, 2, and 1 for the profits of the last 5 years.
Once we have calculated the weighted average profit, we can use it to calculate the goodwill value. In this case, we have used a multiple of 3 to calculate the goodwill value. This means that the goodwill value is equal to three times the weighted average profit. In other words, the goodwill value represents the amount that a buyer is willing to pay for the business above and beyond its tangible assets and liabilities.
Step 1: Calculate Weighted Average Profit
To calculate the weighted average profit, we need to multiply each year's profit by its weight and then add them together, and then divide by the sum of the weights.
Weighted Average Profit = ((9000 x 5) + (12000 x 4) + (15000 x 3) + (13000 x 2) + (10000 x 1)) / (5 + 4 + 3 + 2 + 1)
Weighted Average Profit = 11850
Step 2: Calculate Goodwill Value
Goodwill Value = Weighted Average Profit x 3
Goodwill Value = 11850 x 3
Goodwill Value = 35550
Explanation
Goodwill is an intangible asset that represents the value of a business above its tangible assets and liabilities. To calculate the goodwill value, we need to use the weighted average profit method. This method takes into account the profits of the last few years and assigns weights to them based on their importance. In this case, we have used weights of 5, 4, 3, 2, and 1 for the profits of the last 5 years.
Once we have calculated the weighted average profit, we can use it to calculate the goodwill value. In this case, we have used a multiple of 3 to calculate the goodwill value. This means that the goodwill value is equal to three times the weighted average profit. In other words, the goodwill value represents the amount that a buyer is willing to pay for the business above and beyond its tangible assets and liabilities.
Community Answer
The profit of a firmfor the last 5 years amounted to 9000 12000-15000 ...
Here profit is high or low different profits in five years so you find goodwill here sadisareras method.
year. profit(₹)
1. 9000
2. 12000
3. 15000
4 13000
5. 10000
total. 59000
sadisarerasprofit = total profit/no.of years
= 59000/5
=. 11800₹
Goodwill = sadisarerasprofit×purchasing year
= 11800×3
= 35400₹
year. profit(₹)
1. 9000
2. 12000
3. 15000
4 13000
5. 10000
total. 59000
sadisarerasprofit = total profit/no.of years
= 59000/5
=. 11800₹
Goodwill = sadisarerasprofit×purchasing year
= 11800×3
= 35400₹
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The profit of a firmfor the last 5 years amounted to 9000 12000-15000 13000 and 10000 respectively the value of goodwill is to be calculated at 3 years purchase of weighted average profit weight are to be assigned 5432 and 1 respectively find out the value of goodwill. solution?
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The profit of a firmfor the last 5 years amounted to 9000 12000-15000 13000 and 10000 respectively the value of goodwill is to be calculated at 3 years purchase of weighted average profit weight are to be assigned 5432 and 1 respectively find out the value of goodwill. solution? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The profit of a firmfor the last 5 years amounted to 9000 12000-15000 13000 and 10000 respectively the value of goodwill is to be calculated at 3 years purchase of weighted average profit weight are to be assigned 5432 and 1 respectively find out the value of goodwill. solution? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The profit of a firmfor the last 5 years amounted to 9000 12000-15000 13000 and 10000 respectively the value of goodwill is to be calculated at 3 years purchase of weighted average profit weight are to be assigned 5432 and 1 respectively find out the value of goodwill. solution?.
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