The profits of last five years were 2008 – Rs. 32,000; 2009 – Rs. 21,000; 2010 – Rs. 28,000; 2011 – Rs. 26,000 and 2012 – Rs. 25,000. The weights assigned to each year are 2008-1; 2009- 2; 2010-3; 2011-4; 2012-5. You are being informed that – (i) On October 1, 2012 a scooter shed was constructed for Rs. 40,000. The same was charged to revenue. Depreciation @ 10% p.a. was also not charged on this. (ii) The closing stock for the year 2011 was undervalued by Rs. 3,000. (iii) Profit for the year 2010 was distributed to partners in the ratio of 2 : 2 : 1 instead of 3 : 2 : 1. (iv) An annual Insurance Premium of Rs. 5,000 has not been taken into account during any of the years. The same should be taken into consideration for the purpose of valuation of goodwill. Calculate the goodwill of a firm on the basis of three years’ purchase of the weighted average profits of the last five years.
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THE ANSWER IS - 1,00,800
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