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| What is no of years' purchase while calculating goodwill of the partnership firm? |
Number of years' purchase is the number of years for which the firm will expect to earn the extra amount of profit because of the past efforts of the firm after change of ownership. Number of years' purchase is the number of years for which the firm will expect to earn the super amount of profit because of the past efforts of the firm after change of ownership. Number of years' purchase is the number of years for which the firm will expect to earn the amount of loss because of the past efforts of the firm after change of ownership. Number of years' purchase is the number of years for which the firm will expect to earn the same amount of profit because of the past efforts of the firm after change of ownership. |
| Number of years' purchase is the number of years for which the firm will expect to earn the same amount of profit because of the past efforts of the firm after change of ownership. |
| Number of years' purchase is the number of years for which the firm will expect to earn the same amount of profit because of the past efforts of the firm after change of ownership. It means that time taken by old partners to make the goodwill is no. of purchase year. The goodwill, therefore, should be calculated by multiplying the past average profits by the number of years during which the anticipated profits are expected to accrue. For example, if the past average profit of a business works out at Rs. 20,000 and it is expected that such profits are likely to continue for another three years, the value of goodwill will be ₹60,000. (20,000 × 3), |
