Question

The profits of the three years were as follows:
For the year ended 31.3.2013 profit ₹20,000 (including insurance claim received ₹40000).
For the year ended 31.3.2014 loss ₹80,000 (including voluntary retirement compensation paid ₹1,10,000).
For the year ended 31.3.2015 profit ₹1,05,000 (including profit Of ₹25,000 on the sale of assets). It is agreed that Goodwill of the firm will be valued at 2 years' purchase of 3 years' normal average profit Of the firm.

Answer 1

(20000-40000)+(-80000+110000)+(105000-25000)/3

= -20000+30000+80000/2

=90000/3=30000

goodwill= 30000*2

=60000