9. (Weighted Average Profits Method) Calculate the value of goodwill of a firm on the basis of three year's purchase of the weighted average profit of the last four years. The profits of last four years were: 2014-15 * 5.000 2015-16 * 5.200 2016-17 * 9,300 2017-18 * 10.700 During 2014-15 there was abnormal loss of 1,000 due to theft and in 2017-18 there was a profit from sale of land amounting to 4.000. In 2015-16 closing stock was over valued by * 1.200. The weights are 1, 2, 3 and 4 for the year 2014-15. 2015-16, 2016-17 and 2017-18 respectively.
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2. A and B are partners in a firm sharing profit and losses in the ratio of 2:1. They decide to admit C 3 as a new partner for 1/3 share on 01.04.2018. For this purpose goodwill of the firm is to be valued on the basis of two years purchases of the average profits for the last 3 years. The profits of the firm for the last three years were: Profit/(Loss) (e) Year ending 31st March 2016 3,00,000 31st March 2017 (1,00,000) 31st March 2018 2,50,000 Additional Information: (i) There was an abnormal loss of 30,000 in the year 31st March, 2016. (ii) Closing Stock as on 31st March, 2018 was overvalued by 30,000.
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