Question

7. Ram and Mohan were partners sharing profits and losses in the ratio of 2 : 1. They admitted Shyam as a
partner for 1/5th share in the profits. For this purpose the Goodwill of the firm was to be valued on the
basis of three years' purchase of last five years' average profit. The profits for the last five years ended
31st March, were:
Year
2016
2017
2018
2019
2020
Profit (
1,25,000
1,00,000
1,87,500
(62,500)
1,25,000
Calculate Goodwill of the firm after adjusting the following:
The profit of 2016-17 was calculated after charging * 25,000 for abnormal loss of goods by fire.​

Answer 1

At first we have to add back the abnormal loss in the year 16-17

Then calculate the average profit

16-17 means it belongs to 2017

100000+25000= 125000

Now doing average

125000+ 125000 +187500-62500+125000 = 500000/5

Average profit = 100000

Goodwill = 100000×3 (yrs of purchase given in sum)

= 300000

HOPE THIS WILL HELP TO YOU

Answer 2

Answer:

100000+25000=125000

125000+125000+1875000- 62500+125000=500000/5

average profit=100000

good will=100000x3

             =300000answer

Explanation: