Which method is based on the assumption that a new business will not be able to earn profits during the initial years as compared to an established business by a partnership firm?

Super Profit Method Average Profit Method Weighted Profit Method All of the above

Average Profit Method

Goodwill is valued at agreed number of ‘years’ purchase of the average profits of the past few years. It is based on the assumption that a new business will not be able to earn any profits during the first few years of its operations. Therefore, it should be calculated by multiplying the past average profits by the number of years during which the anticipated profits are expected to accrue.