Goodwill

Hari and Krishan were partners sharing profits and losses in the ratio of 2 : 1. They admitted Shyam as a partner for 1/5th share in the profits. For this purpose the Goodwill of the firm was to be valued on the basis of three years’ purchase of last five years average profits. The profits … Read more

The goodwill of a firm was to be valued at two years’ purchase of the average profits of the last three years. The profits were as under : 2014 – 15 : Rs.  20,000 (including an abnormal gain of Rs.  5,000) 2015 – 16 : Rs.  40,000 (after charging an abnormal loss of Rs.  10,000) … Read more