ILLUSTRATION 2. (Purchase of Simple / Weighted Average Profits). P. Ltd. proposed to purchase the business carried on by C. Goodwill for this purpose is agreed to be valued at three years' purchase of the (i) simple average profits and (ii) weighted average profits of the past four years. The appropriate weights to be used are : 1 3 2013 2014 2015 2016 2 4 The profits for these years are . 2013 $ 1,01,000 ; 2014 $ 1,24,000; 2015 $1,00,000 and 2016 $ 1,50,000. On a scrutiny of the accounts the following matters are revealed : (a) On 1st September, 2015 a major repair was made in respect of the plant incurring $ 30,000 which amount was charged to revenue. The said sum is agreed to be capitalised for goodwill calculation subject to adjustment of depreciation of 10% p.a. on reducing balance method. (b) The closing stock for the year 2014 was over-valued by $12,000. (c) To cover management cost an annual charge of $24,000 should be made for the purpose of goodwill valuation. Compute the value of goodwill of the firm