Question

The amount of goodwill using the weighted average profit method is than the amount computed using the simple average method.

• A. lower or higher
• B. lower
• C. higher
• D. equal

Answer 1

The correct option is A lower or higher

The amount of goodwill using the weighted average profit method is either lower or higher than the amount computed using the simple average method depending upon the profit amount in the latest years. If there is higher profit in latest years, then goodwill amount under weighted average profit method will be more than the simple average method.