Question : Under which method of valuation of goodwill, normal rate of return is not considered?
Option 1: Average profit method
Option 2: Capitalisation method
Option 3: Super profit method
Option 4: All of these

Question

Question : Under which method of valuation of goodwill, normal rate of return is not considered?

Option 1: Average profit method

Option 2: Capitalisation method

Option 3: Super profit method

Option 4: All of these

Team Careers360 · Accepted Answer

Correct Answer: Average profit method

Solution : Under the average profit method only, the normal rate of return is not considered under the valuation of goodwill. Hence, the correct option is 1.

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Question : Under which method of valuation of goodwill, normal rate of return is not considered?Option 1: Average profit methodOption 2: Capitalisation methodOption 3: Super profit methodOption 4: All of these

Related Questions

Question : Under the super profit method, goodwill is calculated by

Question : Under the Capitalisation Method of valuation of Goodwill, the formula for calculating goodwill is:

Question : The Formula for Capitalisation of Super Profit Method is:

Question : From the following information, (i) Capitalisation Method and (ii) at 3 year’s purchase of super profits: What will be the amount of goodwill? (i) Total Assets Rs. 10,00,000 (ii) External Liabilities Rs. 1,80,000 (iii) Normal Rate of Return

Question : Average profit is Rs.5,00,000. Capital employed is Rs.40,00,000. Normal rate of return is 8%. The value of goodwill on the basis of capitalisation of super profit is:

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Question : Under which method of valuation of goodwill, normal rate of return is not considered?
Option 1: Average profit method
Option 2: Capitalisation method
Option 3: Super profit method
Option 4: All of these

Question :
The Formula for Capitalisation of Super Profit Method is:

Question : From the following information, (i) Capitalisation Method and (ii) at 3 year’s purchase of super profits: What will be the amount of goodwill?

(i) Total Assets Rs. 10,00,000

(ii) External Liabilities Rs. 1,80,000

(iii) Normal Rate of Return