Question

What is the treatment for recurring expenses in the average profit method of goodwill valuation?

Answer 1

In Average Profit Method the Goodwill will be valued based on: (i) at agreed number of “ years” of purchase ; and (ii) Of the average ..

Answer 2

Explanation:

Average Profits Method. Under this method, goodwill is calculated on the basis of the average of certain agreed number of past years' profits. The average is then multiplied by the agreed number of years of purchase. This is the simplest and the most commonly used method of the valuation of goodwill.