Abhay, Babu and Charu are partners sharing profits and losses equally. They agree to admit Daman for equal share of profit. For this purpose, value of goodwill is to be calculated on the basis of four years’ purchase of average profit of last five years. These profits for the year ended 31st March, were:
| Year | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Profits (₹) | 1,50,000 | 3,50,000 | 5,00,000 | 7,10,000 | (5,90,000) |
On 1st April, 2024, a two-wheeler was purchased for 1,00,000 and debited to Travelling Expenses Account, on which depreciation is to be charged @ 25% p.a. interest of 10,000 on Non-trade Investments is credit to Income for the year ended 31st March, 2024 and 2025.
Calculate the value of goodwill after adjusting the above.
Answer :