Profits earned by the business during the last 5 years were:

2018- ₹12,000
2019- ₹13,000
2020- ₹14,000
2021 - ₹18,000
2022- (₹2,000)

Calculate the amount of goodwill to be valued at 2 years purchase of average profits of last 5 years.

₹22,000

2018- ₹12,000
2019- ₹13,000
2020- ₹14,000
2021 - ₹18,000
2022- (₹2,000)

Total profit of 5 year = 12000 + 13000 + 14000 + 18000 -2000
                                 = 55000
*2022 Year is a loss so it is deducted from the profits.

 AVERAGE PROFIT = Total profits/No of years
                             = 55000/5
                             = 11000

Goodwill = Average profit x No of years purchase
              = 11000 x 2
              = ₹22000