# Question 4 Chapter 3 of Class 12 Part – 1 VK Publication

Question 4 Chapter 3 of Class 12 Part - 1 VK Publication

Question 4 Chapter 3 of Class 12 Part – 1

4. Kaku purchased Polu’s business on 1st April, 2018. The profits for the last five years are:
31st March, 2014- Rs. 37,000
31st March, 2015- Rs. 47,000 (after charging an abnormal loss of theft of Rs. 4,000)
31st March, 2016- Rs. 53,000 (including an abnormal gain of Rs. 5,000)
31st March, 2017- Rs. 60,000 (including a profit of lottery Rs. 6,000)
31st March, 2018- Rs. 70,000 (after charging Rs. 10,000 a loss of furniture destroyed by fire)
Calculate the value of goodwill on the basis of two years purchase of the average profit of the last five years.

## The solution of Question 4 Chapter 3 of Class 12 Part – 1: –

 Particulars 31st March , 2014 31st March, 2015 31st March , 2016 31st March , 2017 31st March, 2018 Net Profit 37,000 47,000 53,000 60,000 70,000 Add: Abnormal Loss – 4,000 – – – Less: Abnormal Gain – – 5,000 – – Less: Profit of Lottery – – – 6,000 – Add: Loss by Fire – – – – 10,000 Adjusted Profit 37,000 51,000 48,000 54,000 80,000

 Average Profit = Total Profits Number of years = 37,000+51,000+48,000+54,000+80,000 5 = 2,70,000 5 = 54,000

Goodwill = Average Profit x Number of Years’ Purchase = 54,000 x 2 = Rs. 1,08,000.

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