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Goodwill of the firm is valued at two years purchase of the average profit of last four years. The total profits for last four years is ? 40,000. Calculate the goodwill of the firm. |
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Answer» Calculation of Good will: Good will = Average profit of last 4 year x Number of years of purchase of Average profits. Average profits = 40,000/4 = Rs. 10000 Good will = Rs. 10,000 × 2 year purchase = Rs. 20,000 |
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