Question

Calculate goodwill on the basis of two years purchase of average profits of last six years.Profits are as follow:
1st 60,000profit
2nd 40,000profit
3rd 30,000loss
4th 1,00,000profit
5th 1,70,000profit
6th 2,20,000profit​

Answer 1

Answer:

thanks thanks to free points.........

....

...

Answer 2

Explanation:

Calculation of goodwill :

(1) Average profit = Total profit/ No. of years

Average profit = Rs. (800000 + 1500000 + 1800000 - 400000 + 1300000) / 5

Average profit = Rs. 5000000/5

Average profit = Rs. 1000000

Goodwill = Average profit * No. of year's purchase

Goodwill = Rs. 1000000 * 3

Goodwill = Rs.3000000