M/s. Al Hilal LLC started with Capital OMR 800,000, Total Tangible Assets OMR 1,000,000 andCurrent Liabilities OMR 100,000 and decided to admit a new partner in the business and also toreceive the amount of goodwill from the incoming partner. The concern wishes to calculate thevalue of goodwill on the basis of four years purchase of the firm by different methods, such asAverage Profit and Super Profit. The books of accounts revealed some information related to pastyears' profits of 2011 - OMR 15,000, 2012 - OMR 20,000, 2013 - OMR 25,000, 2014 - OMR 30,000,2015 - OMR 35,000, 2017 - OMR 40,000, 2018 - OMR 45,000, 2019 - OMR 50,000. The concernexpects the Rate of Return @ 12.5 % normally.Compute the value of goodwill on the basis of 4 years purchase under Capitalization of AverageProfit Method and Super Profit Method. Which method of goodwill calculation is beneficial forthe firm? Why these two methods showing two different values? Give your comments with thecalculated values.

Calculation of Goodwill as per Capitalized Average profit method: First, calculate Average Profit:…

Answered: M/s. Al Hilal LLC started with Capital…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Mr. Khalid contributed inventory of OMR 10000 and cash OMR 22000 . His total capital for his new business will : Select one: a. Decrease by OMR 32000 b. Increase by OMR 22000 c. Increase by OMR 32000 d. Increase by OMR 10000
What accounting entry would you do 50:50 joint operation was commenced between two participants. Mary Company contributed cash of $90 000, and Strickland Company contributed a Building with a fair value of $90 000 and a carrying amount of $75 000. Using the line-by-line method of accounting, Strickland Company would record? DR Building in JO $75 000 CR Building $75 000 DR Building in JO $945000 CR Building $37 500 CR Gain on sale of building $7 500 DR Investment in joint operation $45 000 CR Building $37 500 CR Gain on sale of building $7 500 DR Cash in JO $45 000 DR Building in JO…
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Jag and rope Co., merged all the assets and liabilities. The company details as follows, Furniture OMR 40,000 & 50,000. Land OMR 60,000 & 40,000. Building OMR 100,000 & 50,000. Vechicle OMR 20,000 & 10,000 and Account payable OMR 40,000 & 60,000. How much value to get after the amalgamate. Select one: a. OMR 370,000 b. OMR 220,000 c. OMR 270,000 d. OMR 180,000
Firm PO and Corporation QR exchanged the following business real estate: Marvin Gardens (exchanged by PO) $ 1,040,000 (715,000) 325,000 $ FMV Mortgage Equity $ Required A Required B Required: a. If PO's adjusted basis in Marvin Gardens was $403,000, compute PO's realized gain, recognized gain, and basis in Boardwalk. b. If QR's adjusted basis in Boardwalk was $78,000, compute QR's realized gain, recognized gain, and basis in Marvin Gardens. Boardwalk (exchanged Complete this question by entering your answers in the tabs below. Realized gain Recognized gain Basis $ by QR) 325,000 -0- 325,000 If PO's adjusted basis in Marvin Gardens was $403,000, compute PO's realized gain, recognized gain, and basis in Boardwalk. Amount
Dynamo Manufacturing paid cash to acquire the assets of an existing company. Among the assets acquired were the following items. Patent with 4 remaining years of legal life $38,600 Goodwill 36,100 Dynamo’s financial condition just prior to the acquisition of these assets is shown in the following statements model. Balance Sheet Income Statement Assets = Liabilities + Stockholders’ Equity Revenue − Expenses = Net Income Statement of Cash Flows Cash + Patent + Goodwill 92,500 + NA + NA = NA + 92,500 NA − NA = NA NA Required Compute the annual amortization expense for these items. Show the acquisition of the intangible assets and the related amortization expense for Year 1 in a horizontal statements model. Prepare the journal entries to record the acquisition of the intangible assets and the related amortization for year 1.
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Dynamo Manufacturing paid cash to acquire the assets of an existing company. Among the assets acquired were the following items.Patent with 4 remaining years of legal life $32,200Goodwill 43,700Dynamo’s financial condition just prior to the acquisition of these assets is shown in the following statements model.Balance Sheet Income StatementAssets= Liabilities +Stockholders’Equity Revenue − Expenses = Net IncomeStatementof CashCash Flows + Patent + Goodwill92,000 + NA + NA = NA + 92,000 NA − NA = NA NARequireda. Compute the annual amortization expense for these items.b. Show the acquisition of the intangible assets and the related amortization expense for Year 1 in a horizontal statements model.c. Prepare the journal entries to record the acquisition of the intangible assets and the related amortization for year
Kath, Julia and Janel formed a joint operation. Kath is to act as managing joint operator and is designated to record the joint operation accounts in his books. As manager, he is alloweda salary of P12,000. Remaining profit (loss) is to be divided equally.The following balances appear at the end of 20x6 before adjustments for joint operation's inventory and profits. Joint operations cash (dr). P48,000; Julia, capital (dr), 3.000; Janel, capital (cr). P27,000. The arrangement is to terminate on December 31, 20x6 with unsold merchandise costing P10,400. Assuming that the joint operations profit is P5,000, what is the balance of the Joint Operation's account before the distribution of profit? 5,400(Dr) P6,400(Cr) 19,000(Dr) 15,400(Dr) During the liquidation, the sale of all the assets of liquidated corporation resulted to net proceeds of P500,000. Liquidation expense amounting to P30,000 has been paid at the start of liquidation from the net proceeds of disposal of all assets. Before the…

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