Question

The profits of firm for the five years are as follows:
`{:(Year,Profit(Rs.)),(2012-13,20000),(2013-14,24000),(2014-15,30000),(2015-16,25000),(2016-17,18000):}`
Calculate the value of goodwill on the basis of three years’ purchase of weighted average profits based on weights 1,2,3,4 and 5 respectively.

Answer 1

Weighted Average Profit = Rs. `(3,48,000)/(15) = Rs. 23,200`
= Rs. `23,200 xx 3 = Rs. 69,600`