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the goodwill of a firm is estimated at two year purchase of the average profit of the last 5 year . if  goodwill of the firm is determined at 1,24,200 and profit or losses of last 4 year is given as;

year                     profit

2010                      ?

2011                    40,000(loss)

2012                    92,000

2013                    70,000

2014                    55,000 

CALCULATE PROFIT OR LOSS EARNED  BY THE FIRM IN THE YEAR 2010

Asked by vishalainghkvs 12th February 2019, 9:53 AM
Answered by Expert
Answer:
Let profit for the year 2010 be Rs.k
Using simple average method of Goodwill:
Goodwill = Avereage of last 5years * No. of years of purchase
 
Substituiting the values given,
124200 = (k-40000+92000+70000+55000)/5 * 2
124200/2 * 5 = k+177000
310500 = k + 177000
k = 133500
 
Therefore, Profit for the year 2010 is 133500.
Answered by Expert 12th February 2019, 10:14 AM
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