Normally how many methods of evaluating the goodwill are there? can you list them?

There are three methods of valuation of goodwill of the firm;

1. Average Profits Method

Goodwill = Average Profits X Number of years of Puchase

2. Super Profits Method

i) Normal Profits = Capital Invested X Normal rate of return/100

ii) Super Profits = Actual Profits - Normal Profits

iii) Goodwill = Super Profits x No. of years purchased

3. Capitalisation Method

Capitalised Value of Average Profits = Average Profits X (100 / Normal Rate of Return)

Capital Employed = Assets - Liabilities

Goodwill = Capitalised Value of Average Profits - Capital Employed

The4 important methods adopted for valuing goodwill are:

1. by an arbitrary assessment.
2. by a capitalization of expected net profits or earnings (or Capitalization Method).
3. by a certain number of years purchase of past average profits or earnings.
4. by super profits or earnings.
   1. Purchase of Super Profit
   2. Annuity Method
   3. Capitalization of super Profit Method.