A and B partners in a firm sharing profits and losses in the ratio of 2...

   

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A and B partners in a firm sharing profits and losses in the ratio of 2 : 1. They decide to take C into partnership for 1/4th share on 1st April, 2018. For this purpose, goodwill is to be valued at four times the average annual profit of the previous four or five years whichever is higher. The agreed profit for goodwill purpose of the past five years are: Year 2013-142014-152015-162016-172017-18 Profit(Rs.) 14,000 15,500 10,000 16,000 15,000 Find the value of Goodwill. A and B partners in a firm sharing profits and losses in the ratio of 2 : 1. They decide to take C into partnership for 1/4th share on 1st April, 2018. For this purpose, goodwill is to be valued at four times the average annual profit of the previous four or five years whichever is higher. The agreed profit for goodwill purpose of the past five years are: Year 2013-142014-152015-162016-172017-18 Profit(Rs.) 14,000 15,500 10,000 16,000 15,000 Find the value of Goodwill.

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Step 1 Calculation of Average Profit Cal average profi... View the full answer