The profit of a firm for the four years from 1991 to 1994 where_ [Ans. Rs. 1, 02,000]

5.      The profit of a firm for the four years from 1991 to 1994 where_  [Ans. Rs. 1, 02,000]

1991	Rs, 40,000
1992	Rs, 45,000
1993	Rs, 55,000
1994	Rs, 53,000

     Calculate the goodwill of the firm at 2yrs. Purchase of the average profit for the last three years.          

---

SOLUTION:

M/S ______________________________________

VALUATION OF GOODWILL

AVERAGE PROFIT METHOD

            
GOODWILL = (AVERAGE PROFIT) (NUMBER OF YEARS PURCHASE)

WHERE : AVERAGE PROFIT = (Total Profit - Total Loss)/ Total Number of years.  

                                                = (53000+55000+45000)/3
                                                = 153000/3
                                                = Rs. 51000

                                                

                                                

GOODWILL  = 51000 × 2

GOODWILL =Rs. 1,02,000