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The formula of average profit method is __________.
$\frac{T o t a l P r o f i t s}{N o . o f y e a r s}$
Super Profit $-$ Normal Profit
Super Profit $\times$ No. of years
$\frac{S u p e r p r o f i t}{N o r m a l p r o f i t}$

Super Profit

-

Normal Profit

\frac{S u p e r p r o f i t}{N o r m a l p r o f i t}

\frac{T o t a l P r o f i t s}{N o . o f y e a r s}

Super Profit

\times

No. of years

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Solution

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Average profit method is the simplest and the most commonly used method of the valuation of goodwill. Under this method, goodwill is calculated on the basis of calculating of average of profits of the firm in past years.

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Normal Profit

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The formula of average profit method is __________.Total ProfitsNo.of yearsSuper Profit − Normal ProfitSuper Profit × No. of yearsSuper profitNormal profit

Average profit method is the simplest and the most commonly used method of the valuation of goodwill. Under this method, goodwill is calculated on the basis of calculating of average of profits of the firm in past years.

The formula of average profit method is __________.
$\frac{T o t a l P r o f i t s}{N o . o f y e a r s}$
Super Profit $-$ Normal Profit
Super Profit $\times$ No. of years
$\frac{S u p e r p r o f i t}{N o r m a l p r o f i t}$