Question

The profits of the last three years are 8,000,
13,000 and 18,000. The goodwill is valued at
2 years' purchase of the average profits of last
three years. The value of goodwill will be –
(a) 20,000
(b) 25,000
(c) 26,000
(d) 30,000​

Answer 1

Answer:

Average profits of 5 year= 20000 + 18000 +2000 +5000 +5000/5

= 10000

Calculation of Goodwill = 10000* 1.5

= 15000