Question

(DS 1,JU,VU
(A) < 2,00,000
13. Weighted average method of calculating goodwill is used when-
(A) Profit are unequal
(B) Profit has increasing trend
(C) Profit has decreasing trend
(D) Either B or C​

Answer 1

(D) Either B or C

When Profit has increasing or decreasing trend then Weighted average method of calculating Goodwill is used because it gives more weightage to the latest profit which is likely to be maintained in upcoming future.