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.

Anurag Pathak Changed status to publish May 3, 2024
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