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A partnership firm earned the net profits during the last three years ended 31st March as following: 2014 – Rs.17,000; 2015 – Rs.20,000; 2016 – Rs.23,000. The capital investment in the firm throughout the above-mentioned period has been Rs.80,000. Having regard to the risk involved, 15% is considered to be a fair return on the capital Calculate value of goodwill on the basis of two years’ purchases of average super profit earned during the above-mentioned three years

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Goodwill =8,000 x 2 = 16, 000

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