ILLUSTRATIONLee and Lawson are in equal partnership. They agreed to take Hicks as one-fourth partner. For this it was decidedto find out the value of goodwill. M/s. Lee and Lawson earned profits during 2013-2016 as followsYearProfits20131,20,00020141.25.00020151,30,00020161.50,000On 31.12.2016 capital employed by M/s. Lee and Lawson was 75,00,000. Rate of normal profitis 20%RequiredFind out the value of goodwill following various methods.assumption : Goodwill is valued at 3 year's .average profit basis
Answers
Answer:
If you want to determine the goodwill of the firm in a simple formula, consider taking the company's purchase price and then subtract it from the net fair market value. The formula stands: Goodwill = P – (A – L).
Explanation:
If you want to determine the goodwill of the firm in a simple formula, consider taking the company's purchase price and then subtract it from the net fair market value. The formula stands: Goodwill = P – (A – L).
Goodwill is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in customers. It is one factor which distinguishes an old established business from a new business at its first start.
Goodwill is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in customers. It is one factor which distinguishes an old established business from a new business at its first start.
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