wiz-icon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Question

Under average profits method, goodwill is valued at agreed number of ________ purchase of the average profits of the past few years.

A
months
No worries! We‘ve got your back. Try BYJU‘S free classes today!
B
years
Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses
C
days
No worries! We‘ve got your back. Try BYJU‘S free classes today!
D
both a and c
No worries! We‘ve got your back. Try BYJU‘S free classes today!
Open in App
Solution

The correct option is D years
Average profits method is based on the assumption that a new business does not earn any profits during the first few years of its operations. Under this method, the goodwill is valued at agreed number of years purchase of the average profits of past few years.

flag
Suggest Corrections
thumbs-up
0
similar_icon
Similar questions
View More
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
Valuation of Goodwill
ACCOUNTANCY
Watch in App
Join BYJU'S Learning Program
CrossIcon