Question

# Calculate the goodwill for 3 years of purchase on the average profit basis.year2014201520162017profit50000600008000030000

A
Rs.140000
B
Rs.150000
C
Rs.165000
D
Rs.175000

Solution

## The correct option is C $$Rs.165000$$Goodwill as per average profit method = average profit X No. of years purchasesAverage  Profit = sum of profits / no. of years                        = $$50000$$+$$60000$$+$$80000$$+$$30000$$ /$$4$$                        = $$RS.55000$$therefore,Goodwill = $$Rs.55000$$ x $$3$$ years of purchases = $$Rs.165000$$ Fundamentals of Accounting and Auditing

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