Accountancy Part AAdmission of a Partner

The steps involved in the calculation of goodwill under the super pro…

The steps involved in the calculation of goodwill under the super profit method are:

(A) Calculate goodwill by multiplying the super profit by number of years purchase

(B) Calculate normal profit

(D) Calculate super profit

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (C), (B), (D), (A)

(C) Calculate Average Profit

(B) Calculate normal profit

(D) Calculate super profit

(A) Calculate goodwill by multiplying the super profit by number of years purchase

NCERT (2026-27 edition):
Super Profits Method – “… 1. Calculate the average profit, 2. Calculate the normal profit on the firm’s capital on the basis of the normal rate of return, 3. Calculate the super profits by deducting normal profit from the average profits, and 4. Calculate goodwill by multiplying the super profits by the given number of years’ purchase.”