# Question 06 Chapter 3 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 06 Chapter 3 of +2-A

6. Annu, Baby and Chetan are partners in firm sharing profits and losses equally. They decide to take Deep into partnership from 1st April 2019 for 1/5th share in the future profits. For this purpose, goodwill is to be valued at 100% of the average annual profits of the previous three or four years, whichever is higher. The annual profits for the purpose of goodwill for the
past four years were:
Year Ended Profit
31st March, 2019 2,88,000;
31st March, 2018 1,81,800;
31st March, 2017 1,87,200;
31st March, 2016 2,53,200.
Calculate the value of goodwill.

The solution of Question 06 Chapter 3 of +2-A

:

 Average Profit For 3 years’ = Total Profit for past given years Number of years
 Average Profit = 2,88,000+1,81,800+1,87,200 3

 = 6,57,000 3 = 2,19,000

 Average Profit For 4 years’ = 2,88,000+1,81,800+1,87,200+2,53,200 4

 = 9,10,200 4 = 2,27,550

Goodwill is to be valued at 100% of the average annual profits of the previous three or four years, whichever is higher

 Goodwill = 2,27,550

Also, Check out the solved question of previous Chapters: –

### T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
• Chapter No. 3 – Goodwill: Nature and Valuation
• Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 – Admission of a Partner
• Chapter No. 6 – Retirement/Death of a Partner
• Chapter No. 7 – Dissolution of a Partnership Firm

### T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 – Financial Statements of a Company
• Chapter No. 2 – Financial Statement Analysis
• Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
• Chapter No. 4 – Accounting Ratios
• Chapter No. 5 – Cash Flow Statement