Question

(Average profit method) Rani purchared Vani's buisness on 31st
March 2015 The profit disclosed by Vani buisness for the last three years were as follows
2013 Rs 40000( including an abnormal goin Rs 5000)
2014 Rs 50000After changing an abnormal loss of 10000)
2015 Rs 45000(Excluding 5000 as insurance premium
of firms property now to be insured)
Calculate the value of firm's goodwill on the basis of 2 year purchase of Average Profut Method of last three year​

Answer 1

Answer:

Year profit/loss adjustments normal profit

2013 40,000 (5,000)gain 35,000

2014 50,000 +10,000loss 60,000

2015 45,000 (5,000)expen 40,000

Total normal profit = 1,35,000

Average profit = total normal profit / no of years

= 1,35,000/3

= 45,000

Goodwill = average profit * no' years of valuation

= 45,000*2

= 90,000

I hope it helps

Answer 2

Answer:

The solution is below

Explanation:

2013 (40000-5000) =35000

2014 (50000+10000)=60000

2015 (45000-5000)=40000

TOTAL PROFIT ==135000

Average Maintainable Profit = Total actual profit/ no. of years .

= 135000 / 3 = 45000

Goodwill= Actual Profit × no.of years purchase

= 45000×2 = 90000