Question

A firm earned of rs 80000 rs 100000rs120000and rs 160000during the past four years . calculate goodwill of thr firm based on three year purchase on the basic of average profit of the last four years​

Answer 1

Explanation:

Live stock account =80000+100000+120000+16000=460000. To cash account =460000

Answer 2

Answer:

average profit = profit for 'n' no of years / 'n' years

                        = 80000+ 100000+120000+160000 / 4 years

                         =460000 /4 years

                        = 115000

goodwill = average profit * no of purchase years

               = 115000 * 3 years

               = 345000

Goodwill = 3,45,000