Question

The important methods of valuation of goodwill are:

• A. Average Profits Method
• B. Super Profits Method
• C. Capitalisation Method
• D. All of the above

Answer 1

Answer: (D)

All of the above

Since goodwill is an intangible asset it is very difficult to accurately calculate its value. Goodwill calculated by one method may differ from the goodwill calculated by another method. The method by which goodwill is calculated, may be specifically decided between the existing partners and the incoming partner. Average Profits Method, Super Profits Method and Capitalisation Method are the important methods of valuation of goodwill.