i don't understand the concept of no.of years purchase for valuation of goodwill in partnership.
plz tell themeaning .
2 Replies
satish
(teaching)
(2046 Points)
Replied 07 May 2018
under this concept we need to calculate Future maintainable profit. i.e. fmp can expect in the future period also.
but up to what extent? period.
if any body wants to purchase the organization, they need to acquire this profit for certain period. so in this case buyer is getting benefit, without putting additional afforts.
so buyer of the business is getting benefit by acquisition of Goodwill. i.e. future maintainable profit for number of years.
but up to what extent? period.
if any body wants to purchase the organization, they need to acquire this profit for certain period. so in this case buyer is getting benefit, without putting additional afforts.
so buyer of the business is getting benefit by acquisition of Goodwill. i.e. future maintainable profit for number of years.
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