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Standard XII

Accountancy

Average Profit Method

A partnership...

Question

A partnership firm earned net profits during the last 3 years as follows:

2007 - Rs. 1,90,000

2008 - Rs. 2,20,000

2009 - Rs. 2,50,000

Calculate the value of goodwill on the basis of 2 years’ purchase of average profits basis during the above mentioned 3 years.

Rs 3,30,000

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Rs 4,40,000

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Rs 1,20,000

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Rs 2,20,000

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Solution

The correct option is B
Rs 4,40,000

Average profits = (Rs. 1,90,000 + Rs. 2,20,000 + Rs. 2,50,000) /3
= Rs. 6,60,000/3
= Rs 2,20,000

Goodwill = Rs. 2,20,000 * 2
= Rs 4,40,000

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2019 - ₹ 1,90,000
2020 - ₹ 2,20,000
2021 - ₹ 2,50,000
Calculate the value of goodwill on the basis of 2 year's purchase of average profits during the above mentioned years.

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The profits of a firm for the last two years are Rs. 45,000 and Rs.30,000. What would be the value of goodwill on the basis of 1 years purchase of the weighted average profits ?

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A partnership firm earned net profits during the last 3 years as follows: 2007 - Rs. 1,90,000 2008 - Rs. 2,20,000 2009 - Rs. 2,50,000 Calculate the value of goodwill on the basis of 2 years’ purchase of average profits basis during the above mentioned 3 years.

The correct option is B Rs 4,40,000 Average profits = (Rs. 1,90,000 + Rs. 2,20,000 + Rs. 2,50,000) /3 = Rs. 6,60,000/3 = Rs 2,20,000 Goodwill = Rs. 2,20,000 * 2 = Rs 4,40,000

A partnership firm earned net profits during the last 3 years as follows:

2007 - Rs. 1,90,000

2008 - Rs. 2,20,000

2009 - Rs. 2,50,000

Calculate the value of goodwill on the basis of 2 years’ purchase of average profits basis during the above mentioned 3 years.

The correct option is B
Rs 4,40,000

Average profits = (Rs. 1,90,000 + Rs. 2,20,000 + Rs. 2,50,000) /3
= Rs. 6,60,000/3
= Rs 2,20,000

Goodwill = Rs. 2,20,000 * 2
= Rs 4,40,000