The profits of a firm for 5 years are as follow:
|
Year |
Profits (₹) |
|
2012-13 |
20,000 |
|
2013-14 |
24,000 |
|
2014-15 |
30,000 |
|
2015-16 |
25,000 |
|
2016-17 |
18,000 |
Calculate Goodwill on the basis of 3 years purchase of weighted average profits of last five years based on weights 1, 2, 3, 4 and 5 respectively.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹69,600
Each year’s profit is multiplied by its weight.
20,000 × 1 + 24,000 × 2 + 30,000 × 3 + 25,000 × 4 + 18,000 × 5
= 20,000 + 48,000 + 90,000 + 1,00,000 + 90,000 = ₹3,48,000
Weighted average profit = ₹3,48,000 ÷ 15 = ₹23,200
Goodwill = ₹23,200 × 3 = ₹69,600
NCERT (2026-27 edition):
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