Read the following information and answer the question.
A and B are partners sharing profits equally. They admit C into partnership for equal share with a guaranteed profit of ₹20,000 per year. The books of the firm revealed following information-
Profits of the last 4 years is:
2016- ₹70,000
2017- ₹1,00,000
2018- ₹55,000 (loss)
2019- ₹1,45,000
If firm had abnormal gain of ₹10,000 for the year 2016, then what will be the net profit for particular year for calculating goodwill of the firm?
Answer & explanation
Correct answer: option 1
The correct answer is option 1- ₹60,000.
Abnormal gain is deducted from profit to find out profit for the goodwill.
PROFIT = 70,000
Less: Abnormal gain = 10,000
CORRECT NET PROFIT = 70,000 - 10,000
= ₹60,000