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Business of Zeo Itd. As on 31st March 2018 Liabilities Amount (P) Asset Amount (P) Share capital 3,000,000 Fixed Assets 2,000,000 Reserves & surplus 750,000 Current Assets 2,500,000 Creditors 1,250,000 Investments 500,000 5,000,000 5,000,000 The investments are 8% government bonds. The net profit after taxation for the past 4 years were P785,000, P845,000, P850,000 and 860,000 respectively. Normal rate of return on average capital employed is 20%. Calculate goodwill at 3 years purchase of super profit.

Business of Zeo Itd. As on 31st March 2018 Liabilities Amount (P) Asset Amount (P) Share capital 3,000,000 Fixed Assets 2,000,000 Reserves & surplus 750,000 Current Assets 2,500,000 Creditors 1,250,000 Investments 500,000 5,000,000 5,000,000 The investments are 8% government bonds. The net profit after taxation for the past 4 years were P785,000, P845,000, P850,000 and 860,000 respectively. Normal rate of return on average capital employed is 20%. Calculate goodwill at 3 years purchase of super profit.

FINANCIAL ACCOUNTING
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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Business of Zeo Itd. As on 31st March 2018 Liabilities Amount (P) Asset Amount (P) Share capital 3,000,000 Fixed Assets 2,000,000 Reserves & surplus 750,000 Current Assets 2,500,000 Creditors 1,250,000 Investments 500,000 5,000,000 5,000,000 The investments are 8% government bonds. The net profit after taxation for the past 4 years were P785,000, P845,000, P850,000 and 860,000 respectively. Normal rate of return on average capital employed is 20%. Calculate goodwill at 3 years purchase of super profit.
Transcribed Image Text:Business of Zeo Itd. As on 31st March 2018 Liabilities Amount (P) Asset Amount (P) Share capital 3,000,000 Fixed Assets 2,000,000 Reserves & surplus 750,000 Current Assets 2,500,000 Creditors 1,250,000 Investments 500,000 5,000,000 5,000,000 The investments are 8% government bonds. The net profit after taxation for the past 4 years were P785,000, P845,000, P850,000 and 860,000 respectively. Normal rate of return on average capital employed is 20%. Calculate goodwill at 3 years purchase of super profit.
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