Question

Goodwill is to be calculated at one year's purchase of the average of the last 3 years profit. The profit of the firm in the first year was Rs.6000 ,second year twice the profit of the first year 1/2 of the profit of the second year. Calculate goodwill.

Answer 1

Goodwill = Average profit - No. of year purchase

7000×1.5 =10500

working note:

1. cal. of profit ( last 3 years)

Year. profit

first year 6000

2nd year 12000 (6000 ×2)

third year 3000 (12000 × 1.5)

total 21000

2.cal. of average profit :

Average profit = total profit for previous given year./ No. of year

= 21000/3

= 7000

Answer 2

Answer:

Goodwill =Average profit x No.of.Year Purchase

=12000x1

Goodwill=12000

Explanation:

Average profit=Total profit of the year/No.of. year

First year=6000

Second year=6000x2=12000

Third year=12000x1.5=18000

=6000+12000+18000

=36000

=36000/3

=12000