Goodwill and Their Valuation
Goodwill is an intangible asset which is not visible and cannot be touched but can be purchased and traded.Goodwill consist many intangible assets like-Brand name,Customer base, Patents,Trademark,copyright etc.In other words, goodwill is a firm worth or reputation established over time.The valuation of goodwill is based on the assumption obtained by the valuer. A businessman work whole life to make its brand Successful, and this brand gives business its desirable reputation in the market. This earned reputation evaluate the business, and its financial worth that a customer is eager to give is known as goodwill. This goodwill play a very important role in Mergers and Acquisitions. Valuation of Goodwill - Average Profits Method – This method is further divided into two sub-parts. Simple Average – In this process, goodwill evaluation is done by calculating the average profit by the number of years it is called years purchase. It can be calculated b...