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Goodwill of a firm is valued at the year purchases less 10% of the average profit oflast five years. The results of last five years are as under-3,000 Profit3,300 Profit3,700 Profit3,400 Loss5,400 ProfitCalculate the value of goodwill |
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Answer» Your answer is 2160 Explanation: Average profit=3000+3300+3700-3400+5400/5 =12000/5 =2400 Average profit=2400 Now, We VALUED Goodwill at LESS 10% of average profit so 2400×10% 240 2400-240 =2160 So the Goodwill of the firm is 2160 Hope it helps you |
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