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P1 C3 VALUATION OF GOODWILL — Elements of Account STD 12 Commerce — Question

Gujarat BoardEnglish MediumSTD 12 CommerceElements of AccountP1 C3 VALUATION OF GOODWILL1 Mark
Question
While valuing goodwill by capitalization of average profit, which points are to be considered?
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Answer

While valuing goodwill by capitalization of average profit, following points are to be considered : $(1)$ Average profit of the business; $(2)$ Expected rate of return; $(3)$ Capital invested in the business

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