Arrange the following steps involved for the Valuation of Goodwill by Average Profit Method:
Arrange the following steps involved for the Valuation of Goodwill by Average Profit Method:
- Goodwill = Average Profit × No. of Year’s Purchase
- Average profit = Total Profits/No. of Years
- Calculate normal profit or loss for each of the past year, after adjusting any abnormalities
a) 4, 2, 3, 1
b) 1, 3, 4, 2
c) 2, 3, 1, 4
d) 3, 4, 2, 1
Anurag Pathak Changed status to publish April 17, 2023
Ans – d)
Explanation:-
First Correct normal profit is calculated after adjusting abnormalities
Total profits is calculated
The average Profit is calculated
Goodwill is calculated
Anurag Pathak Changed status to publish April 17, 2023
