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Question

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

[0.88 marks]

A
₹ 3,30,000
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B
₹ 4,40,000
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C
₹ 6,60,000
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D
₹ 2,20,000
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Solution

The correct option is B ₹ 4,40,000
Average Profit
=(1,90,000+2,20,000+2,50,000)3
=6,60,0003
=2,20,000
Goodwill =2,20,000×2=4,40,000

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