Tuesday, 8 July 2014

Valuation of Cinema Theater - Fair Market Value Method

VALUATION OF CINEMA THEATER

CALCULATION FOR DETERMINATION OF FAIR MARKET VALUE BY PROFIT METHOD

Income

 (i) Income from sale of tickets excluding entertainment tax                    =  Rs. 20,00,000/-
 (ii) Income from exhibition of slides, show cases, soda fountain etc.     =  Rs.   5,00,000/-
                                                                      Total Gross Income    =  Rs. 25,00,000/-


Outgoings

a) Hire charges of film                                                                         =   Rs.  5,00,000/-
b) Hire charges of Incian News Reel                                                    =   Rs.  10,000/-
c) Salary, bonus P.F. Staff Welfare gratuity                                           =  Rs. 2,00,000/-
Insurance collection and management charges                                       =  Rs. 2,00,000/-
d) Coveyance charges                                                                         = Rs. 5,000/-
e) Carbon & Consumable items                                                            = Rs. 15,000/-
f) Printing, Stationary postage etc.                                                        = Rs. 15,000/-
g) Advertisement & Publicity                                                                = Rs. 10,000/-
h) Insurance for building Plat & Machinery                                             = Rs. 5,000/-
i) Licence Fee                                                                                     = Rs. 1,000/-
j) Service charges for projections, air conditioning plants etc.                 = Rs. 15,000/-
k) Electricity Bills                                                                               = Rs. 1,00,000/-
l) Muncipal Taxes                                                                               = Rs. 50,000/-
m) Repair to building P&M furniture & fixture and sinking fund               =  Rs. 50,000/-
n) Enterprencures profit @ 15% on gross income i.e. 25,00,000            =  Rs. 3,75,000/-
= Rs. 15,51,000

Solution

(i) Gross income                                                                                 = Rs. 25,00,000/-
(ii) Total outgoings                                                                              = Rs. 15,51,000/-
                                                                                                       ______________
     Net Income                                                                                   = Rs. 9,49,000/-
Tangible profit 70% of 9,49,000
Intagible profit 30% of 9,49,000
Capitalise tangible profit @ 12% Rs. 6,64,300/- X 100/12                    = Rs.55,35,833/-
Capitalise intangible profit @ 14% = Rs. 2,81,700 X 100 / 14               = Rs. 20,33,571/-
                                                                                                                 ____________
Total                                                                                                         Rs. 75,69,404/-

Say Rs. 75,69,400/-


Prepared by
J.Jaya Ruban,
Land Valuer in Tamilnadu
josephruban33@gmail.com