Treatment of goodwill in partnership accounts


The profit and loss for last year are 2001-02 losses 10,000;2002-03 Losses Rs2,500;2003-04 Profit Rs98,000 & 2004-05 Profit 76,000. The average capital employed in business is Rs2,00,000. The rate of interest expected from capital invested is 12%The renumeration of partner is estimated to be Rs1000 per month not charged in above losses/profit. calculate the value of goodwill on basis of two year purchase of super profit based on average of four year

A}9000                                B}8750                        C}8500                            D}8250




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