Question

which step is not involved in value of Goodwill according to super profit method

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Answer 1

Explanation:

Steps involved in valuing Goodwill by Super Profit Method:

Step 1: Calculate Capital Employed, (Total shareholder's equity + Long term debt).

Step 2: Calculate normal return by multiplying capital employed with normal rate of return.

Step 3: Calculate average maintainable profit (profit after adjusting exceptional items)

Step 4: Super profit= Average maintainable profit- Normal Return

Step 5: Goodwill= Super Profit * Number of years' of purchase.

Answer 2

Answer:

which step is not involved in value of Goodwill according to super profit method