The profits of firm for the five years are as follows:
|
Year |
Profit (Rs.) |
|
2012-13 |
20,000 |
|
2013-14 |
24,000 |
|
2014-15 |
20,000 |
|
2015-16 |
20,000 |
|
2016-17 |
16,000 |
Calculate the value of goodwill on the basis of three years' purchase of average profits.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 60,000
Under the average profits method, goodwill = average profit × number of years’ purchase.
Total profit of five years = 20,000 + 24,000 + 20,000 + 20,000 + 16,000 = Rs. 1,00,000
Average profit = Rs. 1,00,000 ÷ 5 = Rs. 20,000
Goodwill = Rs. 20,000 × 3 = Rs. 60,000
NCERT (2026-27 edition):
NCERT (2026-27 edition):
|
