1.

Goodwill of the firm is valued at 3 years purchase of the average profits of last 5 years. The total profits for the last 5 years are rupees 50000 calculate goodwill of the firm

Answer»

alculation of goodwill :(1) AVERAGE PROFIT = TOTAL profit/ No. of yearsAverage profit = Rs. (800000 + 1500000 + 1800000 - 400000 + 1300000) / 5Average profit = Rs. 5000000/5Average profit = Rs. 1000000Goodwill = Average profit * No. of year's purchaseGoodwill = Rs. 1000000 * 3Goodwill = Rs.3000000



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