Capitalisation method bta do koi??
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Posted by Twinkle Santwani 6 years, 8 months ago
- 3 answers
Jai Yadav 6 years, 8 months ago
3. Capitalisation Method: Under the Capitalisation Method, goodwill can be valued using. two methods: (i) Capitalisation of Average Profit; or
(i) Capitalisation of Super Profit.
(i) Capitalisation of Average Profit: Under this method, goodoill is calculated by deducting . capital employed (i.e, Net Assets as on the date of valuntion) in the business fom the capitalsed value of average profit on the basis of Nornal Rate of Retarn. Capitalised value of the business is. ascertained by capitalising average profit earned at the normal rate of proft. It is calculated as follows:
Average Profit x 100 /Normal Rate of Return (Profit)
Net Assets = All Assets (other than goodwill, fcitious assets and non-trade investments) at their current values minus outsiders' liabilities.
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Innocent Girl 6 years, 8 months ago
1Thank You