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easyMCQCUET Accountancy 2025 29 May Shift 22026Accountancy
1 mark

When goodwill has to be inferred from the arrangement of capital and profit sharing ratio, it is called:

  1. A
    Hidden goodwill.
  2. B
    Average profit method
  3. C
    Super profit method .
  4. D
    Capitalisation method.

Solution & Step-by-step Explanation

Hidden or Inferred Goodwill occurs when the total value of goodwill is not explicitly given in the question, but must be deduced based on the total capital of the firm calculated from the incoming partner's capital contribution and profit sharing share.

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When goodwill has to be inferred from the arrangement of capital and profit sharing ratio, it is called:
A
Hidden goodwill.
B
Average profit method
C
Super profit method .
D
Capitalisation method.

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