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Goodwill is to be calculated at one and half years purchase of average profit of last 5 years. The firm earned profits during first 3 years as, Rs. 20,000, Rs. 18,000 and Rs. 9,000 and suffered losses of Rs. 2,000 and 5,000 in last 2 years. Goodwill amount will be: 
  • a)
    Rs. 12,000
  • b)
    Rs. 10,000
  • c)
    Rs. 15,000
  • d)
    None
Correct answer is option 'A'. Can you explain this answer?
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Calculation of Goodwill:

- Goodwill = 1.5 x Average Profit of last 5 years

- Average Profit of last 5 years = (20,000 + 18,000 + 9,000 - 2,000 - 5,000) / 5
= 40,000 / 5
= 8,000

- Goodwill = 1.5 x 8,000
= 12,000

Therefore, the Goodwill amount is Rs. 12,000.
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Goodwill is to be calculated at one and half years purchase of average profit of last 5 years. The firm earned profits during first 3 years as, Rs. 20,000, Rs. 18,000 and Rs. 9,000 and suffered losses of Rs. 2,000 and 5,000 in last 2 years. Goodwill amount will be:a)Rs. 12,000b)Rs. 10,000c)Rs. 15,000d)NoneCorrect answer is option 'A'. Can you explain this answer?
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Goodwill is to be calculated at one and half years purchase of average profit of last 5 years. The firm earned profits during first 3 years as, Rs. 20,000, Rs. 18,000 and Rs. 9,000 and suffered losses of Rs. 2,000 and 5,000 in last 2 years. Goodwill amount will be:a)Rs. 12,000b)Rs. 10,000c)Rs. 15,000d)NoneCorrect answer is option 'A'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Goodwill is to be calculated at one and half years purchase of average profit of last 5 years. The firm earned profits during first 3 years as, Rs. 20,000, Rs. 18,000 and Rs. 9,000 and suffered losses of Rs. 2,000 and 5,000 in last 2 years. Goodwill amount will be:a)Rs. 12,000b)Rs. 10,000c)Rs. 15,000d)NoneCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Goodwill is to be calculated at one and half years purchase of average profit of last 5 years. The firm earned profits during first 3 years as, Rs. 20,000, Rs. 18,000 and Rs. 9,000 and suffered losses of Rs. 2,000 and 5,000 in last 2 years. Goodwill amount will be:a)Rs. 12,000b)Rs. 10,000c)Rs. 15,000d)NoneCorrect answer is option 'A'. Can you explain this answer?.
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