Question

CLASS 12 QUESTION. Abhay. Babu and Charu are partners sharing profits and losses equally. They agree to admit Damante
equal share of profit. For this purpose, the value of goodwill is to be calculated on the basis of four years
purchase of average profit of last five years. These profits for the year ended 31st March, were:
Year
2016
2017
2018
2019
2020
Profit/(Loss) )
1.50,000
3.50,000
500.000
7.10,000
(5,90,000)
On 1st April 2019, a car casting 1,00,000 was purchased and debited to Travelling Expenses Account on
which depreciation is to be charged @ 25% p.a. Interest of 10,000 on Non-trade Investments is credit
to Income for the year ended 31st March, 2019 and 2020.
Calculate the value of goodwill after adjusting the above.​

Answer 1

Answer:

$\text{25 p.a. Interest of 10,000 on Non-trade Investments is credit}$