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Compute the value of goodwill on the basis of four years’ purchase of the average profits based on the last five years? 

The profits for the last five years were as follows:

Year Amt.Rs.
2002 40,000
2003 50,000
2004 60,000
2005 50,000
2006 60,000

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Good will = 52,000 x 4 = Rs. 2,08,000

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