What are the main factors affecting the value of goodwill?(A) Nature of business(B) Location(C) Efficiency of management(D) Market situationChoose the correct answer from the options given below:
- A(A), (B) and (D) only
- B(A), (B) and (C) only
- C(A), (B), (C) and (D)
- D(B), (C) and (D) only
Solution & Step-by-step Explanation
The valuation of goodwill depends on multiple intrinsic and extrinsic business features:Nature of business: Steady demand products create more goodwill.Location: Prime central locations attract more customers.Efficiency of management: Experienced operational leads boost profitability.Market situation: Monopoly or low competition spaces enhance profit sustainability.All listed statements are valid factors affecting goodwill.