Cinemugam (Kollywood)

1.       The profits of the firm for the last five years are 2002 Rs. 20,000; 2003 Rs. 16,000; 2004 Rs. 24,000; 2005 Rs. 8000; 2006 Rs. 12,000. Calculate the goodwill of the firm.  [Ans. Rs. 16,000] SOLUTION: M/S _________________________________ VALUATION OF GOODWILL                    AVERAGE PROFIT METHOD             GOODWILL = (AVERAGE PROFIT) (NUMBER OF YEARS PURCHASE) WHERE : AVERAGE PRFIT =                                                 =                                                                                                 GOODWILL  = 16000 GOODWILL = 16000 2.       Mona, Reena and Sona have been carrying on a partnership business and good will of their firm is to be valued at three years purchase of the average profit for the last five years. The profit and losses for the last five years have been.  1 st Year Rs. 16,000, 2 nd Year, 15,000, 3 rd Year, 8,000(Loss), 4 th Year, 7,000, 5 th Year, 10,000. [Ans. Rs. 24,000]           SOLUTION: M/S MONA, R