Question

Calculate the amount of goodwill on the basis of

2 years purchase of the last five years’ average

profits. The profits for the last five years are :

4,000; 8,000; 10,000; 6,000; 12,000​

Answer 1

Answer:

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Step-by-step explanation:

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Answer 2

Step-by-step 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