Naman and Amar are partners sharing profits in the ratio of 3 : 2. They decided to admit Raman as a partner from 1st April, 2023 on the following terms:

i) Raman will be given 2/5th share of the profit.

ii) Goodwill of the firm will be valued at two year’s purchase of three year’s normal average profit of the firm.

Profits of the previous three years ended 31st March, were:

2023 – Profit ₹ 30,000 (after debiting loss of stock by fire ₹ 40,000).

2022 – Loss ₹ 80,000 (includes voluntary retirement compensation paid ₹ 1,10,000).

2021 – Profit ₹ 1,10,000 (including a gain (profit) of ₹ 30,000 on the sale of fixed assets).

You are required to value the goodwill.

Anurag Pathak Changed status to publish June 25, 2023
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