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The following particulars are available in respect of the business carried on by a partnership firm:
Trading Results:
2001 Loss Rs. 5,000
2002 Loss Rs. 10,000
2003 Profit Rs. 75,000
2004 Profit Rs. 60,000
You are required to compute the value of goodwill on the basis of 5 year’s purchase of average profit of the business.
- a)Rs. 1,25,000.
- b)Rs.1,50,000.
- c)Rs. 10,000.
- d)Rs. 1,20,000.
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
The following particulars are available in respect of the business car...
Calculation of Goodwill:
To calculate the value of goodwill, we need to determine the average profit of the business over the given period of time and then multiply it by the number of years of purchase.
Step 1: Calculate the average profit:
Average Profit = (Profit in 2003 + Profit in 2004) / 2
Average Profit = (Rs. 75,000 + Rs. 60,000) / 2
Average Profit = Rs. 67,500
Step 2: Calculate the value of goodwill:
Goodwill = Average Profit * Number of Years of Purchase
Number of Years of Purchase = 5 years (as given in the question)
Goodwill = Rs. 67,500 * 5
Goodwill = Rs. 3,37,500
Therefore, the value of goodwill is Rs. 3,37,500.
Conclusion:
The value of goodwill for the partnership firm is Rs. 3,37,500.
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To calculate the value of goodwill, we need to determine the average profit of the business over the given period of time and then multiply it by the number of years of purchase.
Step 1: Calculate the average profit:
Average Profit = (Profit in 2003 + Profit in 2004) / 2
Average Profit = (Rs. 75,000 + Rs. 60,000) / 2
Average Profit = Rs. 67,500
Step 2: Calculate the value of goodwill:
Goodwill = Average Profit * Number of Years of Purchase
Number of Years of Purchase = 5 years (as given in the question)
Goodwill = Rs. 67,500 * 5
Goodwill = Rs. 3,37,500
Therefore, the value of goodwill is Rs. 3,37,500.
Conclusion:
The value of goodwill for the partnership firm is Rs. 3,37,500.
Most Upvoted Answer
The following particulars are available in respect of the business car...
Calculation of Goodwill:
To calculate the value of goodwill, we need to find the average profit of the business for the given period and then multiply it by the desired number of years of purchase.
Step 1: Find Average Profit:
Average profit is calculated by taking the average of the profits earned during the profitable years.
Average Profit = (Profit 1 + Profit 2 + ... + Profit n) / n
Where n is the number of profitable years.
In this case, there are two profitable years (2003 and 2004) with profits of Rs. 75,000 and Rs. 60,000 respectively.
Average Profit = (75,000 + 60,000) / 2
= 1,35,000 / 2
= Rs. 67,500
Step 2: Calculate Goodwill:
Goodwill is calculated by multiplying the average profit by the desired number of years of purchase.
In this case, the desired number of years of purchase is 5.
Goodwill = Average Profit * Number of Years of Purchase
= 67,500 * 5
= Rs. 3,37,500
Conclusion:
Therefore, the value of goodwill on the basis of 5 years purchase of average profit of the business is Rs. 3,37,500.
Since the given options do not match with the calculated value, it seems there may be an error in the options provided. The correct answer cannot be determined based on the given options.
To calculate the value of goodwill, we need to find the average profit of the business for the given period and then multiply it by the desired number of years of purchase.
Step 1: Find Average Profit:
Average profit is calculated by taking the average of the profits earned during the profitable years.
Average Profit = (Profit 1 + Profit 2 + ... + Profit n) / n
Where n is the number of profitable years.
In this case, there are two profitable years (2003 and 2004) with profits of Rs. 75,000 and Rs. 60,000 respectively.
Average Profit = (75,000 + 60,000) / 2
= 1,35,000 / 2
= Rs. 67,500
Step 2: Calculate Goodwill:
Goodwill is calculated by multiplying the average profit by the desired number of years of purchase.
In this case, the desired number of years of purchase is 5.
Goodwill = Average Profit * Number of Years of Purchase
= 67,500 * 5
= Rs. 3,37,500
Conclusion:
Therefore, the value of goodwill on the basis of 5 years purchase of average profit of the business is Rs. 3,37,500.
Since the given options do not match with the calculated value, it seems there may be an error in the options provided. The correct answer cannot be determined based on the given options.
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The following particulars are available in respect of the business carried on by a partnership firm:Trading Results: 2001 Loss Rs. 5,000 2002 Loss Rs. 10,000 2003 Profit Rs. 75,000 2004 Profit Rs. 60,000You are required to compute the value of goodwill on the basis of 5 years purchase of average profit of the business.a)Rs. 1,25,000.b)Rs.1,50,000.c)Rs. 10,000.d)Rs. 1,20,000.Correct answer is option 'B'. Can you explain this answer?
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The following particulars are available in respect of the business carried on by a partnership firm:Trading Results: 2001 Loss Rs. 5,000 2002 Loss Rs. 10,000 2003 Profit Rs. 75,000 2004 Profit Rs. 60,000You are required to compute the value of goodwill on the basis of 5 years purchase of average profit of the business.a)Rs. 1,25,000.b)Rs.1,50,000.c)Rs. 10,000.d)Rs. 1,20,000.Correct answer is option 'B'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The following particulars are available in respect of the business carried on by a partnership firm:Trading Results: 2001 Loss Rs. 5,000 2002 Loss Rs. 10,000 2003 Profit Rs. 75,000 2004 Profit Rs. 60,000You are required to compute the value of goodwill on the basis of 5 years purchase of average profit of the business.a)Rs. 1,25,000.b)Rs.1,50,000.c)Rs. 10,000.d)Rs. 1,20,000.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The following particulars are available in respect of the business carried on by a partnership firm:Trading Results: 2001 Loss Rs. 5,000 2002 Loss Rs. 10,000 2003 Profit Rs. 75,000 2004 Profit Rs. 60,000You are required to compute the value of goodwill on the basis of 5 years purchase of average profit of the business.a)Rs. 1,25,000.b)Rs.1,50,000.c)Rs. 10,000.d)Rs. 1,20,000.Correct answer is option 'B'. Can you explain this answer?.
The following particulars are available in respect of the business carried on by a partnership firm:Trading Results: 2001 Loss Rs. 5,000 2002 Loss Rs. 10,000 2003 Profit Rs. 75,000 2004 Profit Rs. 60,000You are required to compute the value of goodwill on the basis of 5 years purchase of average profit of the business.a)Rs. 1,25,000.b)Rs.1,50,000.c)Rs. 10,000.d)Rs. 1,20,000.Correct answer is option 'B'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The following particulars are available in respect of the business carried on by a partnership firm:Trading Results: 2001 Loss Rs. 5,000 2002 Loss Rs. 10,000 2003 Profit Rs. 75,000 2004 Profit Rs. 60,000You are required to compute the value of goodwill on the basis of 5 years purchase of average profit of the business.a)Rs. 1,25,000.b)Rs.1,50,000.c)Rs. 10,000.d)Rs. 1,20,000.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The following particulars are available in respect of the business carried on by a partnership firm:Trading Results: 2001 Loss Rs. 5,000 2002 Loss Rs. 10,000 2003 Profit Rs. 75,000 2004 Profit Rs. 60,000You are required to compute the value of goodwill on the basis of 5 years purchase of average profit of the business.a)Rs. 1,25,000.b)Rs.1,50,000.c)Rs. 10,000.d)Rs. 1,20,000.Correct answer is option 'B'. Can you explain this answer?.
Solutions for The following particulars are available in respect of the business carried on by a partnership firm:Trading Results: 2001 Loss Rs. 5,000 2002 Loss Rs. 10,000 2003 Profit Rs. 75,000 2004 Profit Rs. 60,000You are required to compute the value of goodwill on the basis of 5 years purchase of average profit of the business.a)Rs. 1,25,000.b)Rs.1,50,000.c)Rs. 10,000.d)Rs. 1,20,000.Correct answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
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ample number of questions to practice The following particulars are available in respect of the business carried on by a partnership firm:Trading Results: 2001 Loss Rs. 5,000 2002 Loss Rs. 10,000 2003 Profit Rs. 75,000 2004 Profit Rs. 60,000You are required to compute the value of goodwill on the basis of 5 years purchase of average profit of the business.a)Rs. 1,25,000.b)Rs.1,50,000.c)Rs. 10,000.d)Rs. 1,20,000.Correct answer is option 'B'. Can you explain this answer? tests, examples and also practice Commerce tests.
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