Amitabh and Bachan are partners sharing profits and losses in the ratio of 5 : 3. On 1st April, 2023, Chaman is admitted to the partnership for 1/4th share of profits. For this purpose, goodwill is to be valued at two year’s purchase of last three year’s profits (after allowing partner’s remuneration).

Profits to be weighted 1 : 2 : 3, the greatest weight being given to last year.

Net Profits before partner’s remuneration for the year ended 31st March, 2021, 2022 and 2023 were: ₹ 2,00,000; ₹ 2,30,000 and ₹ 2,50,000 respectively.

The cost of managing the business is estimated to be ₹ 90,000 p.a.

Calculate the amount of goodwill.

Anurag Pathak Changed status to publish May 3, 2024
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