Purav and Purvi are partners in a firm sharing profits and losses in a ratio of 2 : 1.

They admit Parv into a partnership for 1/4th share on 1st April 2023.

For this purpose, goodwill is to be valued at four times the average annual profit of the previous four or five years, whichever is higher.

The agreed profits for goodwill purposes of the past five years ended 31st March are:

Year Profit (₹)
2019 14,000
2020 15,500
2021 10,000
2022 16,000
2023 15,000

Calculate the value of Goodwill.

[Ans: Goodwill – ₹ 56,500.]

Anurag Pathak Changed status to publish April 17, 2023
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