Question

What are the methods of valuation of goodwill?

Options

• Average Profits Method

• Supper Profits Method

• Capitalization Method

• All of the above

Answer 1

All of the above

Explanation:

It's tough to assess the value of goodwill because it's an intangible asset. For the appraisal of a partnership firm's goodwill, many methodologies have been offered. A method's goodwill calculation may differ from another method's goodwill calculation. As a result, the mechanism for calculating goodwill can be decided specifically between the existing partners and the incoming partner. The following are some of the most common ways of valuing goodwill:

1. Average Profits Method
2. Supper Profits Method
3. Capitalization Method