Question

The profit of a firm for the last five years were as follows
Year ended 31st March
Profits
2011
39.000
50.000
52.000
2014
65,000
2015
85,000
On scrutiny of the account, it was revealed that the closing stock of the year 2013-14 was undervalued
by 5.000
You are required to calculate the value of goodwill on the basis of 2 year's purchase of weighted
average profits. The weights to be used are: 2011-1, 2012-2, 2013-3, 2014-4, 2015-5.​

Answer 1

profit of a firm for the last five years were as follows

Year ended 31st March

Profits

2011

39.000

50.000

52.000

2014

65,000

2015

85,000

On scrutiny of the account, it was revealed that the closing stock of the year 2013-14 was undervalued

by 5.000

You are required to calculate the value of goodwill on the basis of 2 year's purchase of weighted

average profits. The weights to be used are: 2011-1, 2012-2, 2013-3, 2014-4, 2015-5.