[ISC] Q. 9 Solution of Goodwill TS Grewal ISC 2023-24 Edition

Sonu and Sumit are partners sharing profits and losses in the ratio 3 : 2. They admit Sahil as a partner for 1/5th share. For this purpose, goodwill of the firm is to be valued on the basis of 3 years’ purchase of last 4 years’ average profit. Profits for the last four years ended on 31st March were as follows:

1. 2020 — ₹ 7,00,000 [including an Abnormal Gain of ₹ 50,000]
2. 2021 — ₹ 2,50,000 [after charging an Abnormal Loss of ₹ 69,950]
3. 2022 — ₹ 6,10,000
4. 2023 — ₹ 4,50,000

Following additional information is made available:

1. (i) On 1st October, 2020, the firm had purchased a computer for ₹ 3,00,000 and it was debited to stationery expenses. Depreciation is to be charged on computer @ 10% p.a. on Diminishing Balance Method.
2. (ii) Closing Stock of 2021 and 2022 were overvalued by ₹ 30,000 and ₹ 20,000 respectively.
3. (iii) To cover the Operating Cost, an annual charge of ₹ 45,000 should be made for the purpose of goodwill valuation.

Calculate goodwill of the firm.