Question

methods of calculating goodwill​

Answer 1

Answer:

1.Estimate the fair market value of all identified business assets.

2.Determine a fair rate of return on these assets.

3.Subtract the return from the total business earnings. The difference is the excess earnings.

4.Capitalize the excess earnings to determine business goodwill.

Answer 2

Methods of Valuing Goodwill of a Company (7 Methods)

1. Years' Purchase of Average Profit Method
2. Years' Purchase of Weighted Average Method
3. Capitalisation Method
4. Annuity Method
5. Super-Profit Method
6. Capitalisation of Super-Profit Method
7. Sliding Scale Valuation Method