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Tuesday, 19 June 2018

Solution of Question 13 from T.S Grewal 2018 ( Goodwill and Valuation)

Solution of question 13 from the chapter " Goodwill and Valuation is given in attached image. Here I am giving explaination on few points so that you can understand the accounting treatment.
The plant which is sold for 11000 and wrongly credited proceeds to Profit and loss account will be debited back with the amount Rs 11000 as abnormal profit is not allowed while calculation goodwill. Depreciation would have been charged also on such plant with the amount 1000, 900 and 810 and hence will be added back into the profits of respective years.

Management Cost of Rs 24000 is deducted from the profits of every year as given in question.

Plant of 30000 is capitalised and added to profit of respective year and charged depreciation also by WDV method.

If you have any query regarding this solution, feel free to comment.


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