Bhaskar and Pillai are partners sharing profits and losses in the ratio of 3 : 2. They admit Kanika into the partnership for 1/4th share in profit. Kanika brings her share of goodwill in cash. Goodwill for this purpose is to be calculated at two years’ purchase of the average normal profit of the past three years. Profits for the last three years ended 31st March were:
Bhaskar and Pillai are partners sharing profits and losses in the ratio of 3 : 2. They admit Kanika into the partnership for 1/4th share in profit. Kanika brings her share of goodwill in cash. Goodwill for this purpose is to be calculated at two years’ purchase of the average normal profit of the past three years. Profits for the last three years ended 31st March were:
2021 – Profit ₹ 50,000 (including profit on the sale of assets ₹ 5,000).
2022 – Loss ₹ 20,000 (including loss by fire ₹ 30,000).
2023 – Profit ₹ 70,000 (including insurance claim received ₹ 18,000 and interest on investments and Dividend received ₹ 8,000).
Calculate the value of goodwill, Also, Calculate the goodwill brought by Kanika.
[Ans: Goodwill – ₹ 66,000; Kanika Shall being 1/4th of ₹ 66,000, i.e., ₹ 16,500 as Goodwill.]
Anurag Pathak Changed status to publish April 17, 2023
