Maharashtra State BoardHSC Commerce 12th Board Exam
Advertisement Remove all ads

Mahesh and Umesh Are Partners in a Partnership Firm Carrying on Business for the Last 10 Years. - Book Keeping and Accountancy

Mahesh and Umesh are partners in a partnership firm carrying on business for the last 10 years.

You are required to find out the value of goodwill which is to be valued at `(2)1/2` years purchase of last 6 years’ average profit.

The profit and losses for the six years are:

Year Amount
(Rs)
2003 – 2004 1,50,000 (Profit)
2004 – 2005 1,00,000 (Loss)  
2005 – 2006 4,50,000 (Profit)
2006 – 2007 5,00,000 (Profit)
2007 – 2008 50,000 (Loss)
2008 – 2009 5,50,000 (Profit)
Advertisement Remove all ads

Solution

Calculation of Average Profit

Average profit = `\text{Total profit}/text\{Number of Years}`

=`(1,50,000-1,00,000+4,50,000+5,00,000-50,000+5,50,000)/6=Rs2,50,000`

Calculation of Goodwill

`\text{Goodwill of the firm}=\text{Average profit }xx\text{Number of the years'purchase}`

`=2,50,000xx(2)1/2= Rs\ 6,25,000`

Concept: Admission of a Partner - Treatment of Goodwill
  Is there an error in this question or solution?
Advertisement Remove all ads

APPEARS IN

Advertisement Remove all ads
Advertisement Remove all ads
Share
Notifications

View all notifications


      Forgot password?
View in app×