Profit of last 4 years 2007 loos 10000 2008 profit 2500 2009 profit 98...
Profit and Loss Analysis
The given information provides the profit/loss figures for the last 4 years: 2007 (loss of $10,000), 2008 (profit of $2,500), 2009 (profit of $98,000), and 2010 (profit of $76,000). To calculate the average profit, we need to sum up the profits and divide it by the number of years.
Average Profit = (2500 + 98000 + 76000) / 3 = $89,500
Capital Employed
The average capital employed is given as $200,000. It represents the average investment made by the partners in the business over the last 4 years. It is calculated by dividing the total capital employed by the number of years.
Average Capital Employed = $200,000
Rate of Return on Capital Employed (NRR)
The rate of NRR (Net Rate of Return) is given as 12%. NRR is calculated by dividing the average profit by the average capital employed and multiplying it by 100.
NRR = (Average Profit / Average Capital Employed) * 100 = (89500 / 200000) * 100 = 44.75%
Remuneration of Partner
The remuneration of the partner is not taken into account. This means that the profit figures mentioned earlier do not include any amount paid as remuneration to the partner.
Remuneration of Partner = $1000 per month
Goodwill Calculation
Goodwill is the value of a business that exceeds the value of its tangible assets alone. It is calculated by multiplying the average profit by the number of years.
Goodwill = Average Profit * Number of Purchasing Years = $89,500 * 2 = $179,000
The number of purchasing years is given as 2, which means that the goodwill is calculated for a period of 2 years.
In summary, based on the given information, the average profit for the last 4 years is $89,500. The average capital employed is $200,000. The rate of NRR is 44.75%. The remuneration of the partner is not taken into account. The goodwill is calculated as $179,000 for a period of 2 years.
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.