Archive | Goodwill

Factors Affecting Valuation of Goodwill | Business

In this article we will discuss about the internal and external factors affecting the valuation of goodwill of a business.  Internal Factors Affecting Valuation of Goodwill : (1) If risk is less in a business, then the amount of goodwill will be more than those businesses in which risks are more. (2) If quality of […]

10 Important Factors Affecting Goodwill | Business

The main factors affecting the goodwill are as follows:-  1. Suitable Location of the Business 2. Managerial Skill 3. Nature of Business 4. Risk in Business 5. Favourable Contracts 6. Trend in the Profit 7. Possession of Patent and Trade Marks 8. Capital 9. Government Patronage 10. Other Factors. Factor # 1. Suitable Location of […]

Goodwill: Definition, Nature and Features | Business

In this article we will discuss about:- 1. Definition of Goodwill 2. Nature of Goodwill 3. Features 4. Need for Valuation 5. Accounting Treatment. Definition of Goodwill: Goodwill is a thing easy to describe, but very difficult to define. It is the benefit and advantage of good name, reputation and connection of a business. It […]

Evaluating Goodwill of a Business: 4 Methods | Accounting

The following are the methods of evaluating goodwill:- 1. Average Profit Method  2. Super Profit Method  3. Capitalisation Method  4. Annuity Method. Method # 1. Average Profit Method: Under this method goodwill is valued on the basis of an agreed number of years’ purchase of the average maintainable profits. The maintainable profit indicates the adjusted […]

Valuation of Goodwill and Shares | Accounting

Here is a compilation of top eleven accounting problems on valuation of goodwill and shares with its relevant solutions. Problem 1:  From the following information find out Goodwill (a) as per annuity method, (b) as per 4 years’ purchase of super profit, and (c) as per capitalisation of super profit method. Net profits for four […]

Valuation of Goodwill (With Accounting Entries)

The below mentioned article provides an overview on the Valuation of Goodwill:- 1. Meaning of Goodwill 2. Need for Valuation of Goodwill 3. Components of Goodwill 4. General Factors Affecting the Value of Goodwill 5. Profitability on Valuation of Goodwill 6. Expected Developments 7. Yield Expected by Investors from Valuation of Goodwill 8. Capital Employed […]

Super Profits Method for Evaluation of Goodwill

In this article we will discuss about the Super Profits Method for Evaluation of  Goodwill along with Solved Illustrations. In this case, the maintainable profits of the firm whose goodwill is for sale are compared with the “normal” profits for the firm, i.e., profits, which would have been earned with the same capital by an […]

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