Ayub and Amit are partners in a firm and they admit Jaspal into partnership w.e.f. 1st April, 2023. They agreed to value goodwill at 3 years purchase by Super Profit Method for which they decided to average profit of last 5 years. The profits for the last 5 years were:
Ayub and Amit are partners in a firm and they admit Jaspal into partnership w.e.f. 1st April, 2023. They agreed to value goodwill at 3 years purchase by Super Profit Method for which they decided to average profit of last 5 years. The profits for the last 5 years were:
| Year Ended | Net Profit (₹) |
| 31st March, 2019 | 1,50,000 |
| 31st March, 2020 | 1,80,000 |
| 31st March, 2021 | 1,00,000 (Including abnormal loss of ₹ 1,00,000) |
| 31st March, 2022 | 2,60,000 (Including abnormal gain (profit) of ₹ 40,000) |
| 31st March, 2023 | 2,40,000 |
The firm has total assets of ₹ 20,00,000 and Outside Liabilities of ₹ 5,00,000 as on that date. Normal Rate of Return in similar business is 10%.
Calculate value of goodwill.
Anurag Pathak Changed status to publish June 25, 2023
