The important methods of valuation of goodwill are as follows:

(A) Average Profits Method
(B) Normal Profits Method
(C) Super Profits Method
(D) Capitalization Method

Choose the correct answer from the options given below:

(A), (C) and (D) only

The correct answer is Option (2) → (A), (C) and (D) only.

Besides (B) Normal Profits Method, all are method of valuation of goodwill.

Goodwill is the value of the reputation of a firm in respect of the profits expected in future over and above the normal profits. It is extremely difficult to calculate the value of goodwill due to its nature as an intangible asset. The valuation of a partnership company's goodwill has been encouraged by different methods. A difference may exist between goodwill calculated by a method and goodwill calculated by another method. The existing partners and the new partner are therefore free to decide on a particular method of calculation of goodwill.
1. Average profit Method
2. Super profit method
3. Capitalization Method-

• Capitalisation of average profit
• Capitalisation of super profit