Bhaskar and Pillal are pratners sharing profits and losses in the ratio of 3 : 2. They admit Kanika into partnership for 1/4th share in profit. Kanika brings in her share fo goodwill in cash. Goodwill for this purpose is to be calculated at to be calculated at two years' purchase of the average normal profit of past three years. Profits of the last three years ended 31st March, were:
2017 - Profit Rs. 50,000 (including profit on sale of assets Rs. 5,000).
2018 - Loss Rs. 20,000 (including loss by fire Rs. 30,000).
2019 - Profit Rs. 70,000 (including insurance claim received Rs. 18,000 and interest on investments and Dividend received Rs. 8,000).
Calculate the value of goodwill. Also, calculate goodwill brought in by Kanika.

Answer

Goodwill - Rs. 66,000; Kanika shall bring 1/4th of Rs. 66,000, i.e., Rs. 16,500 as Goodwill.