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Tarang purchased Jyoti’s business with effect from 1st April 2023. Profits shown by Jyoti’s Business for the last three financial years ended 31st March were:

2021 : ₹ 1,00,000 (including an abnormal gain of ₹ 12,500).

2022 : ₹ 1,25,000 (after charging an abnormal loss of ₹ 25,000).

2023: ₹ 1,12,500 (excluding ₹ 12,500 as insurance premium on firm’s property – now to be insured).

Calculate the value of the firm’s goodwill on the basis of two years’ purchase of the average profit of the last three years.

[Ans: Goodwill – ₹ 2,25,000.]

Anurag Pathak Changed status to publish April 17, 2023
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