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HOW WE CAN CALCULATE THE GOODWILL OF A PARTNERSHIP FIRM???
The methods of valuation of goodwill are generally decided by the partners
among themselves while preparing partnership deed. The following are the
important methods of valuing the goodwill of a firm :
(i) Average Profit Method
Value of goodwill = Average Profit × Number of year of purchase

(ii) Super Profit Method

Normal profit = Capital employed × normal rate of return/100
Actual Profit : These are the profit earned during the year or it is also
taken as the average of the last few years profit.
Super Profit = Actual Profit – Normal Profit

(iii) Capitalisation Method

Weighted average profit = Total product of profit/ Total of weights
Value of goodwill = Weighted average profit × number of year of purchase


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