Chapter 3: Valuation of Goodwill

Let's learn more about goodwill and its various aspects!

Details

Over a period of time, a well - established business develops an advantage of having a reputation and wide connections. These factors benefit the business.
In accounting, the monetary value of such advantage is known as 'Goodwill'. A firm having goodwill has the capacity to earn more profit than a common firm, and value of goodwill in turn depends on profit earning capacity of the firm.
So, we can say that goodwill doesn't exist for businesses that earn a normal amount of profit or incur loss.


Curriculum

  • Text Book Ch Valuation of Goodwill
    6.1 MB
  • goodwill lecture 1
  • Goodwill lecture 2 Weighted Average Method & Super Profit Method
  • goodwill lecture 3 capitalisation method
  • Goodwill Quiz
    7 questions
  • What is goodwill?
    1 m
  • What is revaluation of goodwill?
    1 m
  • Which type of asset is goodwill ?
    1 m
  • Under which head goodwill is shown in the balance sheet ?
    1 m
  • What is capitalized profit?
    1 m
  • What is super profit?
    1 m
  • What is average profit ?
    1 m
  • What is weighted average profit?
    1 m
  • Practice Quiz
    17 questions
  • 1. Define Goodwill.
    1 m
  • 2. What is the base for the valuation of goodwill ?
    1 m
  • 3. Will the value of goodwill be more or less for a monopolistic type of business?
    1 m
  • 4. When is the valuation of goodwill necessary ?
    1 m
  • 5. While valuing goodwill by capitalization of average profit, which points are to be considered?
    1 m
  • 6. Which kind of business has goodwill value ?
    1 m
  • 7. What is super profit?
    1 m
  • 8. State the method for valuation of goodwill when profit of the last years has increasing trend?
    1 m
  • 9. State the methods for the valuation of goodwill.
    1 m
  • 10. State the factors affecting valuation of goodwill.
    1 m
  • 11. State the circumstances under which weighted average profit method of valuation of goodwill is used.
    1 m
  • 12. In balance sheet, goodwill is shown on which side and under which heading ?
    1 m
  • 13. In which type of business goodwill does not exist?
    1 m
  • 14. State the ‘other special benefits’ regarding factors affecting valuation of goodwill.
    1 m
  • 15. State the circumstances in which valuation of goodwill arises in case of partnership firm.
    1 m
  • 16. What is Capitalized profit ?
    1 m
  • 17. State the formula for Capitalized profit.
    1 m
  • 18. According to capitalized profit method, when can we day that ‘Business does not have goodwill’ ?
    1 m
  • 19. What is the nature of goodwill for business, which depends on the individual’s skills ?
    1 m
  • 20. What is expected rate of return ?
    1 m
  • 21. What is the nature of goodwill for a highly competitive business, and why?
    1 m
  • 22. State the demerits of simple average method of valuing the goodwill.
    1 m
  • 23. What is meant by average profit value based on expected rate of return ?
    1 m
  • Chapter 3 Practice Material
    650 KB
  • One Line Answer and Theory
    1.1 MB
  • 31 texts
  • 2 quizzes
  • 3 PDFs
  • 771+ students
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