Page 230 - Corporate Finance PDF Final new link

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230 Corporate Finance BRILLIANT’S

Value of goodwill based on Super Profit
= 3 year's purchase of Super Profit
= 3 × ` 1,51,320 (Note 2)
= ` 4,53,960

Working Notes:
1. Calculation of Adjusted Average Trading Profit after Tax:

Particulars `

Average Profit [3,18,000 +3,40,000 + (3,12,000 - 10,000)] + 3 3,20,000
Less: Depreciation @ 10% on Revaluation Profit of Tangible Fixed Assets
(4,50,000 - 3,70,000) (8,000)
3,12,000
Less: Income Tax @ 30% 93,600
Average Maintainable Trading Profit after Tax 2,18,400
2. Calculation of Average Super Profit:

Particulars `

Average Maintainable Trading Profit after Tax 2,18,400
Less: Normal return on average capital employed (10% of ` 6,70,800) 67,080
Super Profit 1,51,320

Calculation of Goodwill by Capitalization of Average Maintainable Profits
Average Maintainable Profits 2,18,400
Total Value of business   100   100 = ` 21,84,000
Normal Rate of Return 10
Goodwill = Total Value of business less Capital Employed (Closing)
= ` 21,84,000 – ` 7,80,000
= ` 14,04,000

CAPITALIZATION SUPER PROFIT METHOD
H¡${nQ>bmBOoeZ gwna àm°{’$Q> ‘oWS>

Illustration 3.1.18
From the following information, calculate the value of goodwill as on 31.03.2017.
{ZåZ{b{IV gyMZm go 31.3.2017 H$mo JwS>{db H$s JUZm H$s{OE&
Equity Share Capital (`10) ` 5,00,000 / B{³dQ>r eo¶a H¡${nQ>b (< 10) < 5,00,000
10% Preference Share Capital ` 2,00,000. / 10% {à’$a|g eo¶a H¡${nQ>b < 2,00,000
Reserve and Surplus ` 70,000 / [aOd© VWm gaßbg < 70,000

9% Debentures ` 1,00,000. / 9% {S>~|Mg© < 1,00,000