Under the capitalisation method, the formula for calculating the goodwill is ______.

Question

KollegeApply · Accepted Answer

Under the capitalisation method, the formula for calculating the goodwill is super profits divided by the normal rate of return. Explanation: Under the capitalisation method, goodwill is calculated in two ways: (1) Capitalisation of Average Profits Method: Goodwill = Capitalised Value of Average Profits − Net Assets (Capital Employed) (2) Capitalisation of Super Profits Method: Goodwill = `"Super Profit" xx 100/"Normal Rate of Return"`

AChoose Your Answer