Calculate the goodwill of the partnership firm on the basis of one and half year's purchase of the average profit of the last 3 years.
1st year profit- ₹1,00,000
2nd year profit- ₹2,00,000
3rd year profit was the one and half times of the profit of the 2nd year.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹3,00,000.
1st year profit- ₹1,00,000
2nd year profit- ₹2,00,000
3rd year profit was the one and half times of the profit of the 2nd year.
3rd year profit = 2,00,000 x 1.5
= 3,00,000
Average profit = (1,00,000 + 2,00,000 + 3,00,000)/ 3
= 6,00,000/3
= ₹2,00,000
Goodwill = Average profit x no of years purchase
= 2,00,000 x 1.5
= ₹3,00,000