On 31st March, 2016, ledger balances taken from the books of Menon Ltd. were as follows : Cr. Balances Dr. Balances Share Capital : Authorised & Issued : 5,000 Equity Shares of 100 each fully paid Surplus Account Bank Overdraft Creditors Provision for Taxation Proposed Dividend Land and Buildings Plant ånd Machinery Stock Sundry Debtors 2,20,000 95,000 3,50,000 1,55,000 5,00,000 1,03,000 20,000 77,000 45,000 75,000 8,20,000 8,20,000 Net profits of the company, after deducting all working charges and providing for depreciation and taxation, were as under : Year ended 31* March : 2012 $ 85,000 ; 2013 $ 96,000; 2014 $ 90,000 ; 2015 $ 1,00,000; 2016 $ 95,000. On 31* March, 2016, Land and Buildings were valued at $ 2,50,000 and Plant and Machinery at $ 1,50,000. In view of the nature of the business, it is considered that 10% is a reasonable return on tangible capital. Prepare a valuation of the company's shares after taking into account the revised values of fixed assets and your own valuation of goodwill based on five years' purchase of the super profits based on the average profit of the last five years.

On 31st March, 2016, ledger balances taken from the books of Menon Ltd. were as follows : Cr. Balances Dr. Balances Share Capital : Authorised & Issued : 5,000 Equity Shares of 100 each fully paid Surplus Account Bank Overdraft Creditors Provision for Taxation Proposed Dividend Land and Buildings Plant ånd Machinery Stock Sundry Debtors 2,20,000 95,000 3,50,000 1,55,000 5,00,000 1,03,000 20,000 77,000 45,000 75,000 8,20,000 8,20,000 Net profits of the company, after deducting all working charges and providing for depreciation and taxation, were as under : Year ended 31* March : 2012 $ 85,000 ; 2013 $ 96,000; 2014 $ 90,000 ; 2015 $ 1,00,000; 2016 $ 95,000. On 31* March, 2016, Land and Buildings were valued at $ 2,50,000 and Plant and Machinery at $ 1,50,000. In view of the nature of the business, it is considered that 10% is a reasonable return on tangible capital. Prepare a valuation of the company's shares after taking into account the revised values of fixed assets and your own valuation of goodwill based on five years' purchase of the super profits based on the average profit of the last five years.

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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