Question

34. Average capital employed 14,00,000.
Net profit 2016 2,50,000
2017 1,00,000 loss
2018 4.50.000
NRR 10 %
Goodwill at 3 years purchase of super profit will be:​

Answer 1

Explanation:

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Page No 2.20:

Question 1:

Goodwill is to be valued at three years' purchase of four years' average profit. Profits for last four years ending on 31st March of the firm were:

2016 − ₹ 12,000; 2017 − ₹ 18,000; 2018 − ₹ 16,000; 2019 − ₹ 14,000.

Calculate amount of Goodwill.

ANSWER:

Number of years’ purchase = 3