Vijay & Co. has decided to buy the business of Mr. Sekar who has earned profits in the last three years as Rs. 12,000, Rs. 10,000 and Rs. 11,000. Mr. Sekar was himself taking care of management of the business. If he and worked elsewhere, he would have earned income of Rs. 2,000 p.a. Caluclate the value of goodwill on the basis of 2 years purchase of average profit of last 3 years.

Answer rating: 100% (QA)

To calculate the value of goodwill we will use the formula Go... View the full answer