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Average profit is (₹200000). In future there will be additional salary (₹30000) per year and rent saving (₹10000) per year. What is future maintainable profit?

Answer and explanation

Correct answer: (₹180000)

The direct answer is option A: future maintainable profit is ₹180,000. Maintainable profit means the profit expected to continue in future after making necessary adjustments. The present average profit is ₹200,000. Additional salary will be a future expense, so subtract ₹30,000. Rent saving will reduce future expense, so add ₹10,000. Step by step: ₹200,000 − ₹30,000 = ₹170,000; then ₹170,000 + ₹10,000 = ₹180,000. Option A is correct. Option B, ₹240,000, adds both adjustments and wrongly treats the salary as income. Option C, ₹200,000, makes no adjustment. Option D, ₹160,000, subtracts both salary and rent saving, even though saving increases profit. The memory rule is: future expense subtracts; future saving or extra income adds.

Related tags

GoodwillFuture Maintainable ProfitAdjustment

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