Question

X & Associates is a partnership firm, it intends to revalue its goodwill, average profit for the past five years is Rs. 15,000 per annum and goodwill is being valued 5 years purchase of super profit. What would be the value of the goodwill of the firm if normal profit of the firm is Rs.12,000?

• A. Rs.15,000
• B. Rs.30,000
• C. Rs.20,000
• D. Rs.25,000

Answer 1

Answer: (A)

Rs.15,000

Normal profit=12000

super profit =average profit - normal profit

=15000-12000=3000

then goodwill of the firm =super profit* no of purchase year

=3000*5

=15000