(C) Sahil and Anupam are partners sharing profits in the ratio of 3:2. They admit Raj into
partnership. It was agreed to value goodwill at three years' purchase on the basis of
Weighted Average Profit of the past five years. Profits to be weighted 1
, 2, 3, 4 and
5,
the greatest weightage to be given to
the last year.
The profits for the five years were:
Year ending
Profits ()
31st March, 2018
1,80,000
31st March, 2019
1,60,000
31st March, 2020
2,50,000
31st March, 2021
3,00,000
31st March, 2022
3,50,000
Scrutiny of books of accounts revealed that:
(a) An abnormal gain of
20,000 was earned in the year ended 31st March, 2019.
10,000 was incurred in the year ended 31st March, 2020.
(c) Closing Stock as on 31st March, 2021 was undervalued by 20,000.
(b) An abnormal loss of
You are required to calculate the value of goodwill at the time of Raj's
admission.
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