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 for the last five years were :

Profit (Rs.)50,00040,00075,000(25,000)50,000

Calculate Goodwill of the firm after adjusting the following:

The profit of 2014 – 15 was calculated after charging Rs.  10,000 for abnormal loss of goods by fire.

Marks-3, CBSE:2018-19/Comp/Q-7