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BRILLIANT’S Long Term Financing and Valuation of Goodwill & Shares 207

Expected Rate of Dividend on Equity Share Capital
ExpectedRateof Dividend
 × Paid-up Value of each Equity Share.
NormalRateof Return

1,98,000
  100  9.9% .
20,50,000
9.9% 9.9%
Fully paid share   100 = ` 82.50; Partly paid share   50 = ` 41.25
12% 12%
(c) Fair Value Method: Fair value of each equity share is the average of intrinsic value and
yield value.
 192.17 ` ` 82.50 
Fully paid share = = ` 137.33
2

 142.17 ` ` 41.25 
Partly paid share = = ` 92.71
2
Working Notes:
(1) Income tax @ 50% (assumed) is payable on income of 2015.
(2) For calculating average capital employed, 50% of current year's trading profit (after tax)
is to be deducted. Here, ` 76,000 represents income from investment in government secu-
rities.
(3) Profit for 2015 is ` 5,20,000 which is higher than the profit of 2014 by ` 80,000.
Therefore, the profit of 2014 is ` 5,20,000 – ` 80,000 = ` 4,40,000.
Similarly, the profit of 2013 is ` 3,60,000 (` 4,40,000 - ` 80,000).

Illustration 3.1.8
The Balance Sheet of Coldplay Ltd. as on 31 march, 2016 was as follows:
31 ‘mM© 2016 H$mo H$moëS> ßboo {b{‘Q>oS> H$s ~¡b|g erQ> ZrMo Xr J¶r Wr…
Balance Sheet Coldplay Ltd. as at 31 March, 2016
31 ‘mM© 2016 H$mo H$moëS>ßbo {b{‘Q>oS> H$s ~¡b|g erQ>

Particulars Note No. Amount
({ddaU) (ZmoQ> g§.) (am{e)
(`)

I. EQUITY AND LIABILITIES / Bp³dQ>r Am¡a bm¶{~{bQ>rO
(1) Shareholder's Funds eo¶a hmoëS>g© H$m ’§$S>…

(a) Share Capital/ eo¶a H¡${nQ>b (1) 5,00,000