Answer d, e and f QUESTION 2Shatta Whales has been in trading on her own account for many years. She decides to admit ShattaBindles as a partner. For the purpose of ascertaining the amount which Shatta Bindles should pay for hershare of goodwill, it was agreed that the total goodwill should be valued at three year's purchase of thesimple average profits of the past five years. The profits had been as follows:YearProfit (GHS)20142,81920152,16420163,31020173,19720182,985Required:With reference to the above information;(a) Outline the steps in determining goodwill based on the 'Purchase of number of years'net profit method', with specific emphasis on the simple average methodaverage(b) Ascertain the goodwill payable by Shatta Bindles based on the steps outlined in (a) above(c) Outline three (3) factors that contribute to goodwill.(d) Under the Incorporated Private Partnership Act 152, certain relationships shall not of themselvescreate a partnership. Identify three (3) of such relationships.(e) Distinguish between internally generated goodwill and purchased goodwill and explain howeach of them may be treated in line with standard accounting principles.(f) Outline four (4) events that can cause the cessation of a partner's membership of a firm.

Partnership firm is a association of people who come together as partners to do the business and…

Answered: ta Whales has been in trading c Iles as…

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ta Whales has been in trading c Iles as a partner. For the purpose e of goodwill, it was agreed that

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter15: Property Transactions: Nontaxable Exchanges

Section: Chapter Questions

Problem 2RP

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Question No. 16