Question

How to calculate weighted goodwill when remunration is given

Answer 1

Answer:

We use the weighted average when there exists in increasing or decreasing trend in the profit giving the heights weight to the current year's profit

1. Goodwill= Weighted Average profile X No of year of purchase.
2. Weighted Average Profile= Sum of profit multiplied by weights/Sum of weights.

Answer 2

Explanation:

Steps Involved under Average Profits Method:

(iii) Calculate Average Past adjusted Profits (taking simple average or weighted average as applicable). (iv) Multiply Future Maintainable Profits by number of years' purchase. ADVERTISEMENTS: Value of Goodwill = Future Maintainable Profits x No.