Suraj and Chetan are partners in a firm sharing profits and losses equally. They decide to take Deep into partnership from 1st April, 2023 for 1/5th share in the future profits
Suraj and Chetan are partners in a firm sharing profits and losses equally. They decide to take Deep into partnership from 1st April, 2023 for 1/5th share in the future profits. For this purpose, goodwill is to be valued at 100% of the average annual profits of the previous three or four years, whichever is higher.
The annual profits for the purpose of goodwill for the past four years were:
| Year Ended | Profit (₹) |
| 31st March, 2023 | 2,88,000 |
| 31st March, 2022 | 1,81,800 |
| 31st March, 2021 | 1,87,200 |
| 31st March, 2020 | 2,53,200 |
Calculate the value of goodwill.
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