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1509. Partnership Accounting - Goodwill - Problem on Average Profit Method.

In the Average Profit Method of Computing Goodwill, we calculate average profits for the given number of years. Average profits are to be calculated by computing normal profits which the business would have earned, if no one time or extraordinary event would have happened. Goodwill is then computed by multiplying average profits with the Number of Years Purchase which is agreed between parties.
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