Question

Q 13: THE PROFITS OF LAST 3 YEARS ARE: + 42,000; 739,000 AND 45,000.
GOODWILL AT TWO YEARS' PURCHASE WILL BE.
1. O 42,000
2. O 84.000
3. 071,26,000
4. O 36,000​

Answer 1

Correct question:

The profits for the last 3 years are Rs 42,000, Rs 39,000 and Rs 45,000. The goodwill at 2 years' purchase will be:

1. Rs 42,000

2. Rs 84,000

3. Rs 1,26,000

4. Rs 36,000​

Given data: The profits for the last 3 years are as follows:

• Rs 42,000
• Rs 39,000
• Rs 45,000

To find: The goodwill at 2 years' purchase.

Answer:

Goodwill = Average profit × Number of years' purchase

Average profit = Total profit ÷ Number of years

Total profit = Rs 42,000 + Rs 39,000 + Rs 45,000

Total profit = Rs 8,26,000

Average profit = Rs 1,26,000 ÷ 3

Average profit = Rs 42,000

Goodwill = Rs 42,000 × 2

Goodwill = Rs 84,000

Therefore, the goodwill is (2) Rs 84,000.