CUET Preparation Today
The profits of firm for the five years are as follows:
Calculate the value of goodwill on the basis of three years' purchase of average profits. |
Rs. 20,000 Rs. 40,000 Rs. 60,000 Rs. 70,000 |
Rs. 60,000 |
The correct answer is Option (3) → Rs. 60,000 Total Profit = 20,000+24,000+20,000+20,000+16,000 = Rs 1,00,000
Average Profit= = 1,00,000/5 = 20,000
Goodwill=Average Profit×Number of years’ purchase = 20,000×3=60,000 |
