Question

Profits for the last 4 years are Rs.12,000, 16,000, 23,000, 27,000 respectively. is the goodwill value based on average profits of 2 years' purchase.

• A. Rs. 23,000
• B. Rs. 24,000
• C. Rs. 30,000
• D. Rs. 39,000

Answer 1

The correct option is D Rs. 39,000

Total profit
= 12,000 + 16,000 + 23,000 + 27,000
= Rs. 78,000

Average Profit
= 78,000/4
= Rs. 19,500

Goodwill
= 19,500*2
= Rs. 39,000