Question

(Average Profit Method when Adjustments are Made).
Aman purchased Bharatendu's business with effect from 1st April, 2019. It was agreed that the firm's goodwill will be valued at two years' purchase of average normal profit of the lst three years. Profits of Bharatendu's business for last three years ended 31st March, were:
2017 : Rs. 1,00,000 (including an abnormal gain of Rs. 10,000),
2018 : Rs. 1,10,000 (after charging an abnormal loss of Rs. 20,000),
2019 : Rs. 85,000 (including interest of Rs. 5,000 from non-trade investment).
Calculate value of the firm's goodwill.

Answer 1

Answer:

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