Annu, Baby, and Chetan are partners in a firm sharing profits and losses equally.

They take Deep into partnership from 1st April 2023 for 1/5th share in the future profits.

For this purpose, goodwill is valued at 100% of the average annual profit of the previous three or four years, whichever is higher.

The annual profits for the purpose of goodwill for the past four years were:

Year Ended Profit (₹)
31st March 2023 2,88,000
31st March 2022 1,81,800
31st March 2021 1,87,200
31st March 2020 2,53,200

Calculate the value of goodwill

[Ans: Goodwill – ₹ 2,27,550.]

Anurag Pathak Changed status to publish April 17, 2023