Goodwill calculation

Average profit metod

To calculate the Goodwill, 'Super Profit method' is the best one because it reflects the extra profits that you are going to earn over and above the normal profits earned by that particular industry by paying the Goodwill amt to the seller of say the business/profession he is going to sell to u.

For caln of Goodwill by Super Profit Method, you require :

FMP-Future Maintainable Profits

Avg Capital employed 

NRR-Normal Rate of Return

NYP-Number of Years purchase

Formula being : 

Goodwill=(FMP-Avg Capital Employed*NRR)*NYP