Daniel, Smith and David are Partners sharing profits in the ratio of 2: 2:1. Net trading results for the last four years were 2012-13 - Profits $ 4,12,000; 2013-14 - Loss $ 1,21,500; 2014-15 - Profits 2,23,000 and 2015-16 - Profits $ 3,20,000. Remuneration to Vijay treating as a charge against profits $ 2,000 per month. Other Information: (i) Assets (excluding goodwill) and liabilities as on 31.3.2016 were $ 15,50,000 and $ 5,50,000 respectively. (ii) Average Capital employed in the business is $ 22,00,000. (iii) Rate of interest expected from capital having regard to the risk involved is 10%. You are required to calculate value of goodwill: (a) At two years' purchage of Average Profits of last three years. (b) At two years' purchage of super profits. (c) On the basis of capitalisation of average profits. (d) On the basis of capitalisation of super profits.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
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