A and B are partners in a firm sharing profits and losses in the ratio of 2:1. On 1st April, 2017 they decided to admit C into partnership for 1/5th share in the profits. For this purpose, goodwill was valued at 80% of the average annual profits of the previous four years. The profits of the last four years were:

Year EndingAmount Rs.
31.3.20141,67,000
31.3.20151,56,000
31.3.20161,92,000
31.3.2017(10,000)

Calculate the value of goodwill of the firm and the amount of goodwill premium brought by C on his admission.

Marks-3, CBSE:2018-19/Main/03/Q-7

error: Content is protected !!