Question
The balance sheet of Platinum Ltd. as on 31 st march 2016 is as below Liabilities Amount Assets Amount Share capital 4000 shares of Rs
The balance sheet of Platinum Ltd. as on 31st march 2016 is as below
Liabilities | Amount | Assets | Amount |
Share capital 4000 shares of Rs 100 each fully paid General Reserve Profit and loss Account Sundry creditors Income tax reserve Total |
400000 80000 64000 256000 120000 920000 | Land and building Plant and machinery Patents Stock Debtors Bank Preliminary Expenses Total | 220000 260000 40000 96000 176000 104000 24000 920000 |
The expert valuer valued land and building at Rs 480000, Goodwill at Rs 320000 and Plant and machinery at Rs 240000. Out of the total debtors, it is found that debtors of Rs 16000 are bad. The profits of the company for the three years ended on March 31st have been as follows:
1999- Rs 160000, 2000- Rs 180000, 2001- Rs 212000. The company follows the practice of transferring 25% of profits to general reserve. Similar type of companies earns 10% of the value of their shares. Ascertain the value of shares of company under fair value method.
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