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in Reconstitution of a Partnership Firm – Admission of Partner by (27.3k points)
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The Profits of firm for the last five years were as follows

Year Profits
2002-03 20,000
2003-04 24,0000
2004-05 30,000
2005-06 25,000
2006-07 18,000

Calculate the value of goodwill on the basis of 3 year’s Purchase of weighted average profit based on weights 1, 2, 3, 4, & 5 respectively to the profits for 2002, 2003, 2004, 2005 and 2006.

1 Answer

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Best answer

Weighted Average Profit = \(\frac{3,48,000} {15}\) = 23,200 

Goodwill = 23,200 × 3 = 69,600

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