X purchased the business of Y from 1st Aprit, 2019. For this purpose goodwi
Channel: Doubtnut
Date: 26/04/2020

X purchased the business of Y from 1st Aprit, 2019. For this purpose goodwill is to be valued at 100% of   the average annual profits of the last four years. The profits shown by Y's business for the last four years were:  `{:("Year ended",,"  Rs.",),("31st March 2016","Profit","1,00,000",("after debiting loss of stock by fire Rs. 50,000")),("31st March 2017","Loss","1,50,000",("includes voluntary retirment compensation paid Rs. 80,000")),("31st March 2018","Profit","1,50,000",),("31st March 2019","Profit","2,00,000",):}`  Verification of books of accounts revealed the following :  (i) During the year ended 31st March, 2017, a machine got destroyed in accident and Rs. 60,000 was written off as loss in Profit & Loss Account.  (ii) On 1st July 2017, Two Computers costing Rs. 40,000 each were purchased and were debited to Travelling Expenses Account on which depreciation is to be charged @ 10% p.a. on Straight Line Method.  Calculate the value of goodwill.