Calculation of goodwill

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Sanket Salecha (Querist)
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11 June 2015 I'm a cpt student who is going to appear for the exams after 3 days. In calculation of goodwill do we consider non-recurring profits or we subtract them from the net profits when we are calculating goodwill by capitalisation under super profit method. I have not been able to understand the logic so please do help thank you.

Ankur Singhal

Ankur Singhal (Expert)
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11 June 2015 Dear Sanket.
In calculation of goodwill we only consider the profits earned by recurring activities.
Non recurring profits are to be ignored. So if non recurring profits are included in the amount of profit then we need to subtract it .