Question

What is the base for valuation of goodwill ? a. Profit earning capacity for business b. Total liabilities of the firm c. Total assets of the firm d Total capital of the firm​

Answer 1

Answer:

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Explanation:

The valuation of goodwill is often based on the customs of the trade and generally calculated as number of year's purchase of average profits or super-profits. Valuation of purchased goodwill: (1) Average profit method : Under this method average profit is calculated on the basis of the past few year's profits