Question

Aman purchased Bharat's business with effect from 1st April, 2020. It was agreed that the firm's goodwill will be valued at two years' purchase of average normal profit of the last three year Profits of Bharat's business for last three years ended 31st March, were: 2018 : Rs.1,00,000 (including an abnormal gain of Rs.10,000); 2019 : Rs.1,10,000 (after charging an abnormal loss of Rs.20,000); 2020 : Rs.85,000 (including non-business income of Rs.5,000). Calculate value of the firm's goodwill.


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Answer 1

Answer:

it was agreed that the firms goodwill will be valued at 2 years purchase of Average normal profit of the last 3 years profit of bharat business for the last 3 years ended 31 march : 2018 - 100000 ( including an abnormal gain of 10000) 2019 - 110000( after charging an abnormal loss of 20000 )