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P, Q, and R are partners sharing profits and losses in the ratio of 2 : 2 : 1. They admit 5 for 1/5th share. For the purpose of admission of 5, the goodwill of the firm is to be valued at 3 years’ purchase of the average of 5 years’ profit or loss. The profits (Loss) are:

Year Profits/Loss (₹)
2018-19 30,000
2019-20 70,000
2020-21 1,00,000
2021-22 1,40,000
2022-23 (1,20,000)

On 1st April 2022, a motor cycle costing ₹ 40,000 was purchased and debited to Travelling Expenses, on which depreciation is to be charged @ 25%. The value of goodwill is

a) ₹ 50,000

b) ₹ 1,56,000

c) ₹ 1,50,000

d) ₹ 1,60,000

Anurag Pathak Changed status to publish April 18, 2023
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