Profits for the last 5 years were as follows-
2011 - 43,000
2012 - 50,000
2013 - 52,000
2014 - 65,000
2015 - 85,000
Calculate Goodwill on the basis of 2 years purchase of weighted average profit.
Answers
Explanation:
43,000+50,000+52,000+65,000+85,000
= 2,95,000
average profit =total weight of products
-------‐-------------------------------
total no. of years profit
2,95,000
= --------------- = 59,000
5
Goodwill =Average profit × no.of years purchase
= 59,000×2
=1,18,000
your goodwill is 1,18,000
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Answer:
43,000+50,000+52,000+65,000+85,000= 2,95,000
average profit= (total weight of products)÷( total no. of years)
profit. = 2,95,000÷5= 59,000
Goodwill -Average profit x no.of years purchase = 59,000x2 =1,18,000