1
Question
A and B are partners sharing profits in the ratio of 3 : 2. They decided to admit C as a partner from 1st April, 2018 on the following terms:
(i) C will be given a 2/5th share of the profit.
(ii) Goodwill of the firm be valued at two years' purchase of three years' normal average profit of the firm.
Profits of the previous three years ended 31st March, were:
The normal profit of the firm are:
[2 marks]
A and B are partners sharing profits in the ratio of 3 : 2. They decided to admit C as a partner from 1st April, 2018 on the following terms:
(i) C will be given a 2/5th share of the profit.
(ii) Goodwill of the firm be valued at two years' purchase of three years' normal average profit of the firm.
Profits of the previous three years ended 31st March, were:
The normal profit of the firm are:
[2 marks]
Open in App
Solution
The correct option is A ₹90,000
Normal Profit = Actual Profit* + Abnormal Losses** - Abnormal Gains
= ₹80,000 + ₹30,000 - ₹20,000
= ₹90,000
* ₹(70,000 + 50,000 - 40,000) = ₹80,000
** ₹20,000 + ₹10,000 = ₹30,000
Normal Profit = Actual Profit* + Abnormal Losses** - Abnormal Gains
= ₹80,000 + ₹30,000 - ₹20,000
= ₹90,000
* ₹(70,000 + 50,000 - 40,000) = ₹80,000
** ₹20,000 + ₹10,000 = ₹30,000
Suggest Corrections
1
