Calculate the amount of goodwill. Goodwill of a firm is to be valued at two years'purchase of three years' average profits. Theprofits of the last three years were: 2000 - RO.30,000, 2001 - RO. 40,000 and 2002 - RO. 35,000.Calculate the amount of goodwill.

Step 1: Definition of GoodwillGoodwill is an intangible asset that represents the excess value of a…

Answered: Goodwill of a firm is to be valued at…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter7: Fixed Assets, Natural Resources, And Intangible Assets

Section: Chapter Questions

Problem 7.3.3MBA

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Goodwill of a firm is to be valued at two years' purchase of three years' average profits. The profits of the last three years were: 2000 - RO. 30,000, 2001 - RO. 40,000 and 2002 - RO. 35,000. Calculate the amount of goodwill.