The profit for 1998-99 are rs.2000; fo 1999-2000 is rs.26100 and for 2001-01 is rs.31200. closing stock for 1999-2000 and 2000-01 inclued the defective items of Rs.2200 and Rs.6200 respectilvely which were considered as having market value NIL. calclulate goodwill on avg. profit method.
30 March 2010
Year Profit 98-99 2000 99-00 26100 00-01 31200 Sub-total 59300 Less adj for Stk 6200 Adj 3 yr profit 53100 Avg Profit or goodwill 17700 Note The Cl Stk of 99-00 is op stk of 00-01 so Rs2200 is off set by default
01 April 2010
Dear Girish, it is there in CPT A/c material MCQ. the answer is: 98-99 99-00 00-01 Profit given 2,000 26,100 31,200 Overvaluation of cl. st (-) - (2,200) (6,200) Overvaluation of Op. St. (+) - - 2,200 Revised profit 2,000 23,900 27,200 avg profit 2,000+23,900+27,200/3 = 53100/3 = 17700 Base for answer : stock is to be valued at cost or MV whichever is less AS 2). Since the MV is nil, it should be valued at nil. wrong val. of cl. stock on higher side will increase the profits of current year but will also increase the op. st. of next year and consequently will reduce the profits of next year. Revert back if u need any further clarification. Regards, CA Shakuntala Chhangani
CAclubindia
