FCA Course co-ordinator WIRC coaching c
2525 Points
Joined October 2009
Hi, the answer to ur question is :
(1) goodwill is always calculated on the basis of normal profit earning capacity of the business. so calculate it removing all abnormalities. hence answer given by vijay manwani is correct.
(2) calculation of closing WDV :
In this question opening balance asset account will be split into two parts:
not sold/exchanged (20,000 - 1200) = 18,800 used for full year.
sold/exchanged = used for half year (assumed as question is silent about date of exchange)
book value of part exchanged as on 30.6. = 1,200 - dep(1,200 *10% x 6/12) = 1,200 - 60 = 1,140
value of new furniture acquired = 1,140 + 500 = 1,640
now closing balance of EXISTING furniture :
18,800 - dep (18,800 x 10% x 12/12) =18,800-1,880 = 16,920
1,640 - dep. (1,640 x 10% x 6/12) = 1,640 - 82 = 1,558
closing balance of furniture account = 18,478
Regards, CA Shakuntala Chhangani