How to calculate goodwill by average profit method?
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Answered by
2
Value of goodwill=average profit*no of purchase years..
For example average profit =₹50,000
no. of years purchase =3 years
value of goodwill = ₹50,000*3
= ₹1,50,000
^_^
For example average profit =₹50,000
no. of years purchase =3 years
value of goodwill = ₹50,000*3
= ₹1,50,000
^_^
Answered by
76
Explanation:
) 1. Average Profit Method: Under this method the value of Goodwill is calculated by multiplying the Average Future profit by a certain number of year's purchase. The first step under this method is the calculation of average profit based on past few years' profit.
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