Luv and Kush are partners sharing profits equally. They admit Shubh into partnership for equal share.Goodwill was agreed to be valued at two years' purchase of average profit of last four years.profits
for the last four years were:
years.
Year Ended
31st March, 2016
31st March, 2017
31st March, 2018
31st March, 2019
Normal Profit/(Loss) ()
70,000;
1,00,000;
55,000 (Loss);
1,44,000.
The books of account of the firm revealed as follows:
1. Firm had abnormal gain of * 10,000 during the year ended 31st March, 2016.
2. Firm incurred abnormal loss of * 20,000 during the year ended 31st March, 2017.
3. Repairs to car amounting to * 50,000 was wrongly debited to vehicles on 1st June, 2017
Depreciation was charged on vehicles @ 12% p.a. on Straight Line Method.
calculate the value of goodwill.
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