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Question
Identify the formula for calculating goodwill with the help of the Average Profit Method.
Options
Goodwill = Average Profit × No. of Years Purchases
Goodwill = Total Profit × No. of Years Purchases
Goodwill = Total Profit × No. of years the firm has been in operation
Goodwill = Average Profit × 5 years
MCQ
Solution
Goodwill = Average Profit × No. of Years Purchases
shaalaa.com
Methods of Valuation of Goodwill
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