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MY TOGBLE IT'
COPY.
Enclosure 12.
Hon. Colonial Treasurer,
445
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IalomIng
bitevni vel:
We have made an inspection of the furniture
and fittings in the Public Houses named below.
Te are of opinion that the Licensees in most
instances have under-estimated the value of the furniture &c.,
They appear to have taken the ruin value at auction prices, instead of the present value. We think this has been done in order
to make the value of the goodwill appear higher.
Speaking generally the word "goodwill" as
understood in England is not so understood in Hongkong.
For example a man buys a business for say
82,000 which includes furniture and goodwill, he spends $1,000 on repairs and $500 on furniture and he then estimates the goodwill
at $3,500.
Take another case a man pays say 85,000 which includes goodwill and furniture, he is compelled to remove, it may
be only a few doors up or down the same street, or it may be to a considerable distance, he has to pay 84,000 for the removal, re- -pairs, fittings, and new furniture and he then estimates the
goodwill at $9,000.
Briefly in Hongkong goodwill includes what is generally understood by "goodwill" plus furniture and necessary
alterations.
instances:-
This was clearly proved in the following
(a). Prava East Hotel. The Licensee stated he had given $6,000 for the goodwill &c. but he had spent $2,000 on improve- -ments and furniture he valued the goodwill at $8,000. He added he would not give $200 for the business if he had known what he
knows now.
(b). The German Tavern. The Licensee valued the furniture, stock in trade and goodwill at £2,000 but he shewed us a bill of sale on which he had lent $2,000 on the furniture alone a few
months before he took over the business, and he stated that it