income tax 50 has been payable on these profits dividends have been distributed from 619449

Ascertain the value of goodwill of Sudarsan Ltd. carrying on business from the following:

Liabilities

Assets

Paid-up Capital:

Goodwill at Cost

2,00,000

2,00,000 Shares of Z 10 Each Fully Paid

20,00,000

Land & Building at Cost

9,00,000

Bank Overdraft

3,00,000

Plant & Machinery at Cost (Less

8,00,000

Sundry Creditors

7,00,000

Depreciation)

Provision for Taxation

3,75,000

Stock in Trade

12,00,000

Profit and Loss Appropriation A/c

5,00,000

Book Debts (Less Provision for Bad

7,75,000

Debts)

38,75,000

38,75,000

The Company started operations in 2005 with paid-up capital as aforementioned of 20,00,000. Profits earned before providing for taxation have been as follows:

Year Ended 31 March

2006

6,00,000

2007

7,00,000

2008

8,00,000

2009

5,00,000

2010

9,00,000

Income tax @ 50% has been payable on these profits. Dividends have been distributed from the profits of first 3 years @ 10% and from those of next 2 years @ 15% of the paid-up capital.