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If the book profit is ₹1,40,000 and an abnormal loss of ₹20,000 has already been charged to it, what will be the adjusted profit for the valuation of goodwill?

Answer and explanation

Correct answer: ₹1,60,000

An abnormal loss is not a normal operating item. Since the loss of ₹20,000 has already been deducted from the book profit, it must be added back: ₹1,40,000 + ₹20,000 = ₹1,60,000. Exam tip: Add abnormal losses and deduct abnormal gains while calculating adjusted profit.

Related tags

GoodwillAbnormal-LossAdjusted-ProfitPartnership-AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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