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Hi John,
Thanks for providing these lectures, they help a great deal.
My question is how do I value Goodwill when selling to a prospective buyer? I can only capitalise goodwill if I buy a company but how do they value the goodwill for me to know how much to capitalise?
I hope I’m clear.
thank you
You are not asked to value goodwill in the exam (except in the case of consolidated accounts, and this is explained in my free lectures).
In practice there is no rule as to how goodwill is valued. A common way is to value it as a multiple (for example, 10 times) the average profit.
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