A firm has profits for the years as follows- 2019- Rs 5,000, (including loss by fire of Rs 1,000) 2020 - Rs 10,000 (including gain on fixed asset of Rs 4000) 2021 -and Rs 3000 Calculate firm's goodwill on the basis of three years purchase.

5000 10,000 15,000 18,000

15,000

Average Profit = (5000+1000) + (10000-4000) + 3000 = 15000/3 = 5000 Goodwill = AP * No. of years purchased              = 5000 * 3 = 15000