Page 277 - DCOM205_ACCOUNTING_FOR_COMPANIES_II
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Accounting for Companies – II
Notes 3. Super Profits:
`
Average Annual Profits 85,000
Less: Normal profits 8% of capital employed 5,75,000 ×8 46,000
100
Super Profit
39,000
4. Goodwill = Super Profit × No. of years’ purchase.
= ` 39,000 × 3
= ` 117,000
(B) Valuation of Share
(i) Net Assets: `
Goodwill 1,17,000
Buildings 3,10,000
Machinery 85,000
Debtors 2,00,000
Stock 32,000
Cash 38,000
Gross Total of Assets 7,82,000
Less: External Liabilities:
Creditors 60,000
Provision for Tax 30,000 90,000
Net Assets or Intrinsic Values of Shares 6,92,000
Net Assets
(ii) Value of one equity share =
No. of equity shares
6,92,000
= = ` 17.3 per share.
40,000
Illustration 4 (valuation of Different types of Equity Shares having the Different Paid up values)
The balance sheet of Rohit and Sons Ltd. (a company engaged in the business of clothing) as at
31 December, 2010 was as under:
st
Liabilities ` Assets `
Share Capital: Fixed Assets:
(i) 35,000 Equity Shares of ` 10 each fully paid up 3,50,000 Goodwill 35,000
(ii) 105,000 Equity Shares of ` 5 fully paid. 5,25,000 Land & Buildings 2,10,000
Plant & Machinery 10,50,000
(iii) 70,000 Equity Shares of ` 10 each ` 8 paid up. 5,60,000 Current Assets:
272 LOVELY PROFESSIONAL UNIVERSITY
