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Balance sheet Liablities:capital=250000 Creditors=80000 Bills payable=20000 Assets:land=180000 Machine=110000 Stock=8000 The profit of the business of 2 years 40000,450000.find out goodwill by captilization method, rate of return is 10%?
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Balance sheet Liablities:capital=250000 Creditors=80000 Bills payable=...
Goodwill Calculation using Capitalization Method
Given information:
Capital = 250000
Creditors = 80000
Bills payable = 20000
Land = 180000
Machine = 110000
Stock = 8000
Profit of 2 years = 40000, 45000
Rate of return = 10%
Step 1: Calculate the Average profit for two years
Average Profit = (40000+45000)/2
= 42500
Step 2: Calculate the Capitalized Value of Average Profit
Capitalized Value = Average Profit / Rate of Return
= 42500 / 0.1
= 425000
Step 3: Calculate the Adjusted Net Assets
Adjusted Net Assets = Total Assets – Total Liabilities
= (180000 + 110000 + 8000) – (80000 + 20000)
= 297000
Step 4: Calculate the Goodwill
Goodwill = Capitalized Value – Adjusted Net Assets
= 425000 – 297000
= 128000
Explanation:
Capitalization method is one of the methods used to calculate the goodwill of a business. This method involves calculating the capitalized value of the average profits of the business and subtracting the adjusted net assets from it.
In this case, we have calculated the average profit of two years which is 42500. Then we have used the rate of return of 10% to calculate the capitalized value of the average profit which is 425000.
Next, we have calculated the adjusted net assets by subtracting the total liabilities from the total assets. Then we have subtracted the adjusted net assets from the capitalized value to get the goodwill which is 128000.
Overall, this method helps in determining the value of the business based on its profits and assets.
Given information:
Capital = 250000
Creditors = 80000
Bills payable = 20000
Land = 180000
Machine = 110000
Stock = 8000
Profit of 2 years = 40000, 45000
Rate of return = 10%
Step 1: Calculate the Average profit for two years
Average Profit = (40000+45000)/2
= 42500
Step 2: Calculate the Capitalized Value of Average Profit
Capitalized Value = Average Profit / Rate of Return
= 42500 / 0.1
= 425000
Step 3: Calculate the Adjusted Net Assets
Adjusted Net Assets = Total Assets – Total Liabilities
= (180000 + 110000 + 8000) – (80000 + 20000)
= 297000
Step 4: Calculate the Goodwill
Goodwill = Capitalized Value – Adjusted Net Assets
= 425000 – 297000
= 128000
Explanation:
Capitalization method is one of the methods used to calculate the goodwill of a business. This method involves calculating the capitalized value of the average profits of the business and subtracting the adjusted net assets from it.
In this case, we have calculated the average profit of two years which is 42500. Then we have used the rate of return of 10% to calculate the capitalized value of the average profit which is 425000.
Next, we have calculated the adjusted net assets by subtracting the total liabilities from the total assets. Then we have subtracted the adjusted net assets from the capitalized value to get the goodwill which is 128000.
Overall, this method helps in determining the value of the business based on its profits and assets.
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Balance sheet Liablities:capital=250000 Creditors=80000 Bills payable=20000 Assets:land=180000 Machine=110000 Stock=8000 The profit of the business of 2 years 40000,450000.find out goodwill by captilization method, rate of return is 10%?
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Balance sheet Liablities:capital=250000 Creditors=80000 Bills payable=20000 Assets:land=180000 Machine=110000 Stock=8000 The profit of the business of 2 years 40000,450000.find out goodwill by captilization method, rate of return is 10%? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Balance sheet Liablities:capital=250000 Creditors=80000 Bills payable=20000 Assets:land=180000 Machine=110000 Stock=8000 The profit of the business of 2 years 40000,450000.find out goodwill by captilization method, rate of return is 10%? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Balance sheet Liablities:capital=250000 Creditors=80000 Bills payable=20000 Assets:land=180000 Machine=110000 Stock=8000 The profit of the business of 2 years 40000,450000.find out goodwill by captilization method, rate of return is 10%?.
Balance sheet Liablities:capital=250000 Creditors=80000 Bills payable=20000 Assets:land=180000 Machine=110000 Stock=8000 The profit of the business of 2 years 40000,450000.find out goodwill by captilization method, rate of return is 10%? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Balance sheet Liablities:capital=250000 Creditors=80000 Bills payable=20000 Assets:land=180000 Machine=110000 Stock=8000 The profit of the business of 2 years 40000,450000.find out goodwill by captilization method, rate of return is 10%? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Balance sheet Liablities:capital=250000 Creditors=80000 Bills payable=20000 Assets:land=180000 Machine=110000 Stock=8000 The profit of the business of 2 years 40000,450000.find out goodwill by captilization method, rate of return is 10%?.
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