4 :- Asin and Shreyas were partners sharing profits and losses in the ratio of 2 : 1. They admitted Shyam as a partner for 1/5th share in profits. For this purpose, the Goodwill of the firm was to be valued on the basis of three years’ purchase of the last five years’ average profit. Profits for the last five years ended 31st March were:
Calculate goodwill of the firm after adjusting the following
Profit of 2021-22 was calculated after charging Rs 25,000 for abnormal loss being goods lost by fire.
Solution :- Profit after adjustments
Average profit of last five years after adjustments = 1,25,000 + 1,25,000 + 1,87,500 – 62,500 + 1,25,000/5
= Rs 1,00,000
Goodwill = 1,00,000 x 3 = Rs 3,00,000