Goodwill is to be calculated at one and half year' purchase of average profit of last 5years. The firm earned profits during 3 years as ? 20,000 ? 18,000 and ? 9,000 and sufferedlosses of ? 2,000 and ?5,000 in last 2 years. The amount of goodwill will be
A)Rs 12000
B)Rs 10000
C)Rs 15000
D)None of the Above

Question

Quizplus · Accepted Answer

Goodwill = 1.5 * Average profit of last 5 yearsAverage profit = (20000 + 18000 + 9000 - 2000 - 5000) / 5= 18000Goodwill = 1.5 * 18000= Rs. 27000

Goodwill Is to Be Calculated at One and Half Year