Question

17. Dinesh and Mahesh are partners sharing profits and losses in the ratio of 3:2. They admit Ramesh into
partnership for 1/4th share in profits. Ramesh brings in his share of goodwill in cash. Goodwill for this
purpose shall be calculated at two years' purchase of the weighted average normal profit of past three
years. Weights being assigned to each year 2017-1:2018-2 and 2019-3. Profits of the last three years were:
2017-Profit 50,000 (including profits on sale of assets 5,000).
2018-Loss 20,000 (including loss by fire 35,000).
2019-Profit 70,000 (including insurance claim received * 18,000 and interest on investments and
dividend received 8,000).
Calculate the value of goodwill. Also, calculate the goodwill brought in by Ramesh.​

Answer 1

Answer:

year. amount. adjustme

2017. 50000 less:5000

2018. (20000). add:35000

2019. 70000. less:

18000+8000

normal profit

2017=. 45000

2018=. 15000

2019=. 44000

now multiply with the weight assigned

$45000 \times 1$

$15000 \times 2$

$44000 \times 3$

average weight profit =

$207000 \div 6 \\ = 34500 \\ = 34500 \times 2 \\ = 69000 \: ans\\ = now \: calculate \\ \: 1 \div 4share \: of \: ramesh$