If past profits are rupees one lakh two lakh and six lakh and the last year includes abnormal gain of rupees three lakh what is the adjusted profit of the last year for averaging?

Correct answer: Rupees 300000

The direct answer is option A: ₹3,00,000. An abnormal gain is a one-time or unusual income that should not be treated as part of normal, maintainable profit. The last reported profit is ₹6,00,000, and it includes an abnormal gain of ₹3,00,000. To remove that unusual income, subtract it: adjusted last-year profit = ₹6,00,000 − ₹3,00,000 = ₹3,00,000. Option A is correct. Option B, ₹6,00,000, leaves the abnormal gain inside the profit and therefore overstates normal earning capacity. Option C, ₹9,00,000, adds the abnormal gain again, which makes the error even larger. Option D, ₹1,00,000, is not obtained from the given adjustment and has no stated basis. The purpose of adjustment is to make all past profits comparable and normal before calculating average profit or goodwill. Notice the opposite rule: an abnormal loss is added back, but an abnormal gain is deducted. The exam memory line is “unusual income out, unusual loss back in.” Always check whether the exceptional item is already included in the reported profit before adjusting it.