Weighted average profit method.

1.	Weighted average profit method.
Answer» Goodwill is calculated by multiplying the weighted average profit by a certain number of years of purchase. Goodwill = Weighted average profit x Number of years purchase In this method, weights are assigned to each year’s profit. Weighted profit is ascertained by multiplying the weights assigned with the respective year’s profit. Weighted average profit = (Total of weight profits)/(Total of weight)

Answer»

Goodwill is calculated by multiplying the weighted average profit by a certain number of years of purchase.

Goodwill = Weighted average profit x Number of years purchase

In this method, weights are assigned to each year’s profit. Weighted profit is ascertained by multiplying the weights assigned with the respective year’s profit.

Weighted average profit = (Total of weight profits)/(Total of weight)

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Weighted average profit method.

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