Ranjan and Anjan were partners in a firm sharing profits and losses in 3:2. They admitted Sanjan for 1/4 share of profit on 1 Jan 2024. Goodwill of the firm will be valued at 3 years purchase of average profit of last 4 years which were-
2024: ₹80,000
2023: ₹1,40,000
2022: ₹2,00,000
2021: ₹1,60,000
The goodwill of the reconstituted firm will be:
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹4,35,000.
Profits of the firm are as follows-
2024: ₹80,000
2023: ₹1,40,000
2022: ₹2,00,000
2021: ₹1,60,000
Average profit = Total Profits of year (2021 +2022 + 2023 + 2024)}/4
= (80,000 + 1,40,000 + 2,00,000 + 1,60,000)/4
= 5,80,000/4
= 1,45,000
Goodwill = Average profit x No of years purchase
= 1,45,000 x 3
= 4,35,000