The following is the Balance Sheet of Lila Ltd. as on .31.12.2814. Liabilities Amount ($) Assets Amount ($) 10,000 equity shares of 20 each fully paid P/L Account 200,000 Land and Buildings 1,68,000 Plant and Machinery 40,000 30,000 40,000 18,000 30,000 1,20,000 10,000 20,000 24,000 12,000 4,000 3,58,000 Debentures Furniture Trade creditors 5% tax free govt. bonds Provision for tax Stock Proposed dividend Book debts Cash Total 3,58,000 Total The net profits of the company after changing depreciation and taxes were as follows: 2010- $ 34,000 2011-$ 38,000 2012 - $ 36,000 2013- $ 40,000 2014- $ 38,000. On 31.12.2014 Land and Building were revaluated at $ 1,90,000, Plant and machinery at $ 1,42,000 and Furniture at $ 8,000. 10% represents a fair commercial rate of return on investment in the company. Find out the value of goodwill. a) 5 years purchase of average super profits for the last 5 years. b) Capitalisation of super profit method. c) Annuity method, present value of an annuity of ReI for 5 years at 10% is $ 3.78.

The following is the Balance Sheet of Lila Ltd. as on .31.12.2814. Liabilities Amount ($) Assets Amount ($) 10,000 equity shares of 20 each fully paid P/L Account 200,000 Land and Buildings 1,68,000 Plant and Machinery 40,000 30,000 40,000 18,000 30,000 1,20,000 10,000 20,000 24,000 12,000 4,000 3,58,000 Debentures Furniture Trade creditors 5% tax free govt. bonds Provision for tax Stock Proposed dividend Book debts Cash Total 3,58,000 Total The net profits of the company after changing depreciation and taxes were as follows: 2010- $ 34,000 2011-$ 38,000 2012 - $ 36,000 2013- $ 40,000 2014- $ 38,000. On 31.12.2014 Land and Building were revaluated at $ 1,90,000, Plant and machinery at $ 1,42,000 and Furniture at $ 8,000. 10% represents a fair commercial rate of return on investment in the company. Find out the value of goodwill. a) 5 years purchase of average super profits for the last 5 years. b) Capitalisation of super profit method. c) Annuity method, present value of an annuity of ReI for 5 years at 10% is $ 3.78.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 2MC: During 2021, Anthony Company purchased debt securities as a long-term investment and classified them...

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