From the following particulars, Calculate value of goodwill of a firm by capitalization of Average Profit Method
Profit of last five consecutive years ending 31st March are;
2020 – Rs 54,000, 2019- Rs 42,000, 2018- Rs 39,000, 2017 – Rs 67,000 and 2016- Rs 59,000
Capitalization rate 20%
Net Assets of the firm Rs 2,00,000
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profit=54000+42000+39000+67000+59000/5
=261000/5
=52200
Goodwill=(52200×100/20)-200000
= 61000
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