Question

Ashok sold his business to Mukesh. Calculate the value of goodwill taking into consideration the
following factors :
(i) Goodwill is valued at two year's purchase of the average profits of the last five years profits. The
profit of last five years were as follows: 2011-12 * 37,000; 2012-13 2 47,000; 2013-14 * 60,000
2014-15 53,000; 2015-16 70,000
(ii) Abnormal loss of 7 4,000 due to theft has reduced from the profits of the year 2012-13.
(iii) Profits for the year 2013-14 include abnormal profits of 5,000.
(iv) A speculative and lottery profit of 6,000 was received during the year 2014-15 which was
included in that year's profit.
(v) Profits of the year 2015-16 were reduced by 10,000 of the loss of furniture which was destroyed
by fire during the year.​

Answer 1

Answer:

3Sumit’s share =

1

5

Remaining share =

1

1

5

− =

4

5

Anil’s new share =

3

5

of 4

5

=

12

25

Vishal’s new share =

2

5

of 4

5

=

8

25

New profit sharing ratio of Anil, Vishal and Sumit will be 12:8:5.

Note: It has been assumed that the new partner acquired his share from old partners in

old ratio.

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