A and b are partners sharing profit and losses in the ratio of 3:1 . it was decided that with effect from 1st April 2015 the profit sharing ratio will be 5:3 goodwill is to be valued at 2 years purchase of average of 3 years profits . the profits for the year ending 31st March 2013, 2014,2015 were 36000 and 32000 and 40000 respectively.
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Answer:
Goodwill Rs. 72,000
Explanation:
Average profit = Total profits/ Numbers of years profits
= 36000 + 32000 + 40000/3
= 1,08,000/3
= Rs.36,000
Goodwill. = Avg profits X Number of years purchase
= 36,000 X 2
= Rs. 72,000
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