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Q.4A M/s. Mahroobha LLC wishes to find the value of Goodwill on the basis of 2 years purchase under Capitalization of Average Profit Method and

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Q.4A M/s. Mahroobha LLC wishes to find the value of Goodwill on the basis of 2 years purchase under Capitalization of Average Profit Method and Super Profit Method. The firm has given its profit for last 8 years are - 2011 - OMR 25,000, 2012 - OMR 30,000, 2013 - OMR 35,000, 2014 - OMR 40,000, 2015-OMR 45,000, 2017 - OMR 50,000, 2018 - OMR 55,000, 2019 - OMR 60,000. The firm normally expects the Rate of Return @ 10% for the Capital Employed in the business OMR 400,000. Further the Total Tangible Assets of the firm is OMR 400,000 and Current Liabilities of the firm is OMR 150,000 Compute the value of goodwill on the basis of 4 years purchase under Capitalization of Average Profit Method and Super Profit Method. Which method of goodwill calculation is beneficial for the firm? Why these two methods showing two different values? Give your comments with the calculated values. (1+1+0.5=2.5 Marks) Q4.B M/s. Ali & Baba LLC, a partnership firm decides to increase the business volume and the same accepted by partners Ali and Baba. The business is started searching a good partner in to the partnership with two different decisions. The first decision tells that the partners Ali and Baba sharing profits in the ratio of 7:3 and admitting Saleem in to the partnership for 1/5th share of future profits which will be acquired 3/10th from Ali and 1/10th from Baba. The second decision tells that the partners Ali & Baba sharing profits in the ratio of 5:2 and admitting Saleem as new partner. He will be acquired 2/5th of Ali's share and 1/5 of Baba's share. Calculate new ratio and sacrificing ratio of the partners and suggest which alternative is good for the new partner? Comment it. (1+1+0.5 = 2.5 Marks) Page 5 of 10

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