Question

8.
Calculate the value of goodwill on 1st January, 2018 at 2.5 years purchase of average
profit of last four year's profit. Profit and Loss for last some years are as follows -
Year
Profit and Loss
₹
2013
2014
2015
30,000 (Loss)
20,000 (Profit)
28,000 (Profit)
32,000 (Profit)
40,000 (Profit)
2016
2017
Done Got the answer:- 75000

Answer 1

Answer:

Calculation of goodwill :

(1) Average profit = Total profit/ No. of years

Average profit = Rs. (800000 + 1500000 + 1800000 - 400000 + 1300000) / 5

Average profit = Rs. 5000000/5

Average profit = Rs. 1000000

Goodwill = Average profit * No. of year's purchase

Goodwill = Rs. 1000000 * 3

Goodwill = Rs.3000000