The profit for the five years of a firm are as follows:
|
Year |
Profit (Rs.) |
|
2013 |
4,00,000 |
|
2014 |
3,98,000 |
|
2015 |
4,50,000 |
|
2016 |
4,45,000 |
|
2017 |
5,00,000 |
Calculate goodwill of the firm on the basis of 4 years purchase of 5 years average profits.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 17,54,400
-
Total Profit = 4,00,000 + 3,98,000 + 4,50,000 + 4,45,000 + 5,00,000 = 21,93,000
-
Average Profit = 21,93,000 ÷ 5 = 4,38,600
-
Goodwill = 4,38,600 × 4 = 17,54,400