Accountancy Part AAdmission of a Partner

Goodwill can also be ascertained by capitalising the super profit dir…

Goodwill can also be ascertained by capitalising the super profit directly under which method?

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Capitalisation of Super Profit Method

Under this method, goodwill = super profit × 100/normal rate of return, so there is no need to capitalise the average profits first.

NCERT (2026-27 edition):
Methods of Valuation of Goodwill – “… (b) Capitalisation of Super Profits: Goodwill can also be ascertained by capitalising the super profit directly. Under this method there is no need to work out the capitalised value of average profits.”