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Question 6 Chapter 3 - Unimax Class 12 Part 1
6. The profits of a firm for the last five years were as follows :
| Year | 2017 | 2018 | 2019 | 2020 | 2021 |
| Profit (Rs.) | 20000 | 24000 | 30000 | 25000 | 18000 |
Calculate the value of goodwill as on 1.1.22 on the basis of three years’ purchase of the weighted average profits of last 5 years. Weights 1, 2, 3, 4 and 5 respectively have been given to the profits for the year 2017, 2018, 2019, 2020 and 2021.
| P | W | (Proudct) | |
| Year | Profits (Rs.) | Weights | PW |
| 2002 | 20000 | 1 | 20000 |
| 2003 | 24000 | 2 | 48000 |
| 2004 | 30000 | 3 | 90000 |
| 2005 | 25000 | 4 | 100000 |
| 2006 | 18000 | 5 | 90000 |
| 15 | 348000 |
Average Profits = 348000/15 = Rs. 23200
Goodwill = Rs. 23200 x 3 years
= Rs. 69600
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