Abhay, Babu and Charu are partners sharing profits and losses equally. They agree to admit Daman for equal share of profit. For this purpose, the value of goodwill is to be calculated on the basis of four year’s purchase of average profit of last five years. These profits for the year ended 31st March, were:

Year Profit/Loss (₹)
2019 1,50,000
2020 3,50,000
2021 5,00,000
2022 7,10,000
2023 (5,90,000)

On 1st April, 2022, a car was purchased for ₹ 1,00,000 and was wrongly debited to Travelling Expenses Account. Depreciation is to be charged @ 25%. Interest of ₹ 10,000 on Non-Trade Investments is credited to Income for the yar ended 31st March, 2022 and 2023.

Calculate the value of Goodwill after adjusting the above.

Anurag Pathak Changed status to publish April 1, 2024
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