Question

Bhaskar and Pillai are partners sharing profits and losses in the ratio of 3:2. They admit Kanika into
partnership for 1/4th share in profit
. Kanika brings her share of goodwill in cash. Goodwill for this purpose
is to be calculated at two years' purchase of the average normal profit of past three years. Profits of the
last three years ended 31st March, were:
2018-Profit * 50,000 (including profit on sale of assets 5,000).
2019-Loss 720,000 (including loss by fire 30,000).
2020-Profit * 70,000 (including insurance claim received 18,000 and interest on investments and
Dividend received 8,000).
Calculate the value of goodwill. Also, calculate goodwill brought by Kanika.
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Answer 1

Answer:

page 1 and 2 respectively

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Answer 2

Explanation:

Bhaskar and Pillai are partners sharing profits and losses in the ratio of 3 : 2. They

admit Kanika into partnership for 1/4th share in profit. Kanika brings in her share of

goodwill in cash. Goodwill for this purpose is to be calculated at two years' purchase

of the average normal profit of past three years. Profits of the last three years ended

31st March, were:-

2017 - Profit Rs.50,000 (including profit on sale of assets Rs.5,000).

2018 - Loss Rs.20,000 (including loss by fire Rs.30,000).

2019 - Profit Rs. 70,000 (including insurance claim received Rs. 18,000 and

interest on investments and Dividend received Rs. 8,000).

Calculate the value of goodwill. Also, calculate goodwill brought in by Kanika.