Tarang purchased Jyoti’s business with effect from 1st April, 2025. Profits shown by Jyoti’s business for the last three financial years ended 31st March, were:
| 2023 | 1,00,000 (including an abnormal gain of 12,500). |
|---|---|
| 2024 | 1,25,000 (after charging an abnormal loss of 25,000). |
| 2025 | 1,12,500 (excluding 12,500 as insurance premium on firm's property-now to be insured). |
Calculate the value of firm’s goodwill on the basis of two years’ purchase of the average profit of the last three years.
Answer :