Calculate the amount of adjusted profit for the year ended 31 March 2021 for the purpose of valuation of Goodwill from the following information:Profi - Accountancy MCQ CUET Accountancy 2022 20 Aug Shift 2 2026 | ExamTest.live

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Calculate the amount of adjusted profit for the year ended 31 March 2021 for the purpose of valuation of Goodwill from the following information:Profit for the year ended 31 March 2021: Rs. 80, 000 On 1 July, 2020, a major plant repair was undertaken for Rs. 10, 000 which was charged to Revenue. The said sum is to be capitalised for Goodwill valuation subject to adjustment of depreciation @ 10% p.a. on reducing balance method.

Solution & Step-by-step Explanation

Given Profit = Rs. 80, 000 .Add: Major plant repair wrongly charged to Revenue = + 10, 000 .Less: Depreciation on the capitalized plant for 9 months (July 1 to March 31) Depreciation = 10, 000 \times 10% \times \frac{9}{12} = Rs. 750 Adjusted Profit = 80, 000 + 10, 000 - 750 = Rs. 89, 250

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Calculate the amount of adjusted profit for the year ended 31 March 2021 for the purpose of valuation of Goodwill from the following information:Profit for the year ended 31 March 2021: Rs. 80, 000 On 1 July, 2020, a major plant repair was undertaken for Rs. 10, 000 which was charged to Revenue. The said sum is to be capitalised for Goodwill valuation subject to adjustment of depreciation @ 10% p.a. on reducing balance method.

Rs. 90, 000

Rs. 89, 000

Rs. 89, 750

Rs. 89, 250

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