Question

Which of the following formula is/are used for valuation goodwill under super profit basis?

• A. Goodwill $=$ Super profit * No. of years purchases.
• B. Goodwill $=$ Super profit * annuity factor.
• C. Goodwill $=$ $\frac{Superprofit}{Capitalisationrate}X100$.
• D. All of the above.

Answer 1

Answer: (D)

All of the above.

Following are various method of valuation of goodwill under super profit basis:

1. Super profit basis = Super profit * No. of years purchase

2. Annuity basis = Super profit * Annuity factor

3. Capitalisation basis = (Super profit/ Capitalisation rate) * 100