From the following particulars, calculate the value of goodwill of a firm by the Capitalisation of Average Profit Method.
(i) Profits of last five consecutive years ending 31st March, are: 2024 – ₹ 54,000; 2023 – ₹ 42,000; 2022 – ₹ 39,000; 2021 – ₹ 67,000 and 2020 – ₹ 59,000.
(ii) Capitalisation rate 20%.
(iii) Net assets of the firm ₹ 2,00,000.
[Ans.: Goodwill – ₹ 61,000.]
Solution:-
