Mention and explain the Methods of Valuation of Goodwill?

There are three methods of valuation of goodwill of the firm;

1. Average Profits Method

2. Super Profits Method

3. Capitalisation Method

 One more method is the  super profits  method.

In this method excess of actual  profits  over  average profits are  calculated to get the Super Profits.Then the valuation of goodwill is done by multiplying super profits with agreed nuber of years usually 3-5 years.