Raman and Daman are partners sharing profits in the ratio of 60 : 40 and for the last four years they have been getting annual salaries of ₹ 50,000 and ₹ 40,000 respectively.

The annual accounts have shown the following net profit before charging partner’s salaries:

Year ended 31st March, 2021 – ₹ 1,40,000; 2022 – ₹ 1,01,000 and 2023 – ₹ 1,30,000.

On 1st April 2023, Zeenu is admitted to the partnership for 1/4th share in profit (without any salary).

The Goodwill is to be valued at four years’ purchase of weighted average profit of the last three years (after partner’s salaries); Profits are to be weighted as 1, 2, and 3, the greatest weight being given to the last year.

Calculate the value of Goodwill.

[Ans.: Goodwill – ₹ 1,28,000.]

Anurag Pathak Changed status to publish April 17, 2023
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