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can u explain Good will calculation methods?
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Answer / kaushal jha.
Goodwill is calculated by 3 method:-
1) Average profit method: In this method We calculate
goodwill as follow- Total Profit
-------------- * No.of Purchasing year
No. of year
2)Super profit Method:- Average Profit - Normal Profit =
Super Profit and Multiply(*) No. of purchasing Year.
3) Capitalisation Method :- In this method first we find
Average Profit and multiply it Normal rate of return.
| Is This Answer Correct ? | 53 Yes | 10 No |
Answer / anjaneyulu cherukuri
Goodwill be calculated By Three Methods
. Super Profit Method.
. Annuity Method
. NRR Method
| Is This Answer Correct ? | 34 Yes | 11 No |
Answer / laxman
Correct calculation of goodwill is very difficult work. But with using correct formulae of specific method , you can easily calculate goodwill . There are four methods to calculate goodwill .
Ist Method
Average profit method
In this method, we calculate previous year’s profits average and then we multiply it with number of purchase years.
2nd Method
Super profit method
In this method, we calculate normal profit with normal rate on investment. Then we calculate super profit with following formula.
Super profit = average profit / actual profit – normal profit
Goodwill = super profit X No. of purchase years
3rd Method
Capitalization method
In this method, we calculate capital employed with following formula
Capital employed = average profit or normal profit X 100/ Rate
Goodwill = capital employed – Net Assets
4th Method
Annuity Method
In this method we first of all calculate annuity . Annuity means annual value . These day , accountant are using different annuity tables for calculating annuity , after this they can easy calculate goodwill with following formula .
Goodwill = Super profit X Annuity
| Is This Answer Correct ? | 9 Yes | 3 No |
Answer / surya
there types of methods
1.anntity method
2.sinking fund metho
| Is This Answer Correct ? | 3 Yes | 11 No |
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