ascertain goodwill from the following according to capitalization method
Answer (1)
14th Nov, 2020
Hello,
Goodwill under capitalisation method can be calculated by capitalizing average normal profit or capitalizing super profits. Under this method goodwill is ascertained by deducting Actual Capital Employed (i.e., Net Assets as on the valuation date) from the capitalised value of the average profits on the basis of normal rate of Return (also known as value of the firm or capitalised value of business).
Goodwill = Capitalised Value – Net Assets of Business
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