While calculating Goodwill under super profit method, the sequence followed is:

(A) Calculation of Super profit
(B) Calculation of Capital Employed
(C) Calculation of Normal profit
(D) Calculation of Average profit
(E) Calculation of Goodwill

Choose the correct answer from the options given below:

(D), (B), (C), (A), (E)

The correct answer is option 2- (D), (B), (C), (A), (E).

(D) Calculation of Average profit: First, the average profit is determined based on past financial records.

(B) Calculation of Capital Employed: Next, the capital employed in the business is calculated.

(C) Calculation of Normal profit: Then, the normal profit is calculated, which is the expected return on the capital employed.

(A) Calculation of Super profit: Afterward, the super profit is calculated by subtracting the normal profit from the average profit.

(E) Calculation of Goodwill: Finally, the goodwill is calculated by multiplying the super profit by the number of years of purchase.