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14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is?
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14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018...
Calculation of Average Profit
- Profit for 2016 = Rs 4000
- Profit for 2017 = Rs 52,200
- Profit for 2018 = Rs 62,400
- Defective items included in closing stock for 2017 = Rs 4,400
- Defective items included in closing stock for 2018 = Rs 12,400
- Adjustment for defective items = Rs (4,400 + 12,400) = Rs 16,800
- Adjusted profit for 2017 = Rs (52,200 - 16,800) = Rs 35,400
- Adjusted profit for 2018 = Rs (62,400 - 16,800) = Rs 45,600
- Average profit = Rs ((4000 + 35,400 + 45,600) / 3) = Rs 28,000
Calculation of Goodwill
- Goodwill = Average profit x Number of years' purchase
- Number of years' purchase = (Total number of years of profits) / 2
- Total number of years of profits = 3
- Number of years' purchase = (3 / 2) = 1.5
- Goodwill = Rs (28,000 x 1.5) = Rs 42,000
Explanation
The average profit method is used to calculate the value of goodwill. In this method, the average profit of the business for a certain number of years is calculated, and then multiplied by the number of years' purchase to arrive at the value of goodwill. The number of years' purchase is usually half the number of years of profits. In this case, the profits for 2016, 2017, and 2018 were taken into consideration. However, the closing stock for 2017 and 2018 included defective items with no market value. Therefore, an adjustment was made to arrive at the adjusted profits for those years. The average profit was then calculated as (4000 + 35,400 + 45,600) / 3 = Rs 28,000. The number of years' purchase was calculated as 3/2 = 1.5. Therefore, the value of goodwill was calculated as Rs 28,000 x 1.5 = Rs 42,000.
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14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018...
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14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is?
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14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about 14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is?.
14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about 14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is?.
Solutions for 14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is? in English & in Hindi are available as part of our courses for CA Foundation.
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Here you can find the meaning of 14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is? defined & explained in the simplest way possible. Besides giving the explanation of
14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is?, a detailed solution for 14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is? has been provided alongside types of 14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is? theory, EduRev gives you an
ample number of questions to practice 14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is? tests, examples and also practice CA Foundation tests.
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