Question : The profits earned by a business over the last 5 years are as follows:
Rs 24,000, Rs 26,000, Rs 28,000 Rs 36,000 and Rs 4,000 (loss) based on 2 years' purchase of last 5 years' profits. Value of goodwill will be:
Option 1: Rs 47,200
Option 2: Rs 44,000
Option 3: Rs 2,20,000
Option 4: Rs 2,26,000
Answer (1)
23rd Jan, 2024
Correct Answer: Rs 44,000
Solution : Answer = Rs 44,000
Total profit Rs 1,10,000.
Average profit = 1,10,000/5 = Rs 22,000.
Goodwill Rs 22,000 × 2 = Rs 44,000.
Hence, the correct option is 2.
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