Form the following particulars, calculate value of goodwill of a firm by applying Capitalisation of Average Profit Method:
(i) Profits of last five consecutive years ending 31st March are:
2018 – Rs. 54,000; 2017 – Rs. 42,000; 2016 – Rs. 39,000; 2015 – Rs. 67,000 and 2014 – Rs. 59,000.
(ii) Capitalisation rate 20%.
(iii) Net assets of the firm Rs. 2,00,000.
