What is meant by goodwill?
Name any two methods of valuation of goodwill. (Marks 2) Ans 1 Goodwill : Goodwill is the advantage of good name, relations of a business. It is the attractive force that brings in customers. It distinguishes an established business from a new one as it helps the business to earn more profits. Methods of valuation of goodwill : (i) Average Profits Method (ii) Super Profit Method. Q 2 R and S are partners sharing profits in the ratio of 5 : 3. T joins the firm as a new Partner. R gives 1/4 of his share and S gives 2/5 of his share to the new partner. Find out the new ratio.
