Annu Baby and Chetan are partners in a firm sharing profits and losses equally They decide to take D......

Annu, Baby and Chetan are partners in a firm sharing profits and losses equally. They decide to take Deep into partnership from 1st April, 2019 for 1/5th share in the future profits. For this purpose, goodwill is to be valued at 100% of the average annual profits of the previous three or four years, whichever is higher. The annual profits for the purpose of goodwill for the past four years were:

Year Ended                Profit

31st March,  2019     2,88,000;

31st March,  2018     1,81,800;

31st March,  2017     1,87,200;

31st March,  2016     2,53,200.

Calculate the value of goodwill

By: NIHARIKA WALIA