Super Profits Method
This approach or technique produces expected future maintainable profits in excess of typical profits. Below is a list of these methods' two super profits techniques:
- According to the number of years, the purchase method Super-profits are multiplied by a specific number from the purchase year to determine goodwill. You can assess it by using the formula as Super Profit = Actual or Average profit – Normal Profit
- The average super profit is taken into account as an annuity value over a specific number of years in the Annuity Method. The current value of an annuity at the specified interest rate is calculated using a discounted amount of super profit. Here, the formula to be applied is.
Goodwill = Super Profit x Discounting Factor
What do you mean by super profit?
The practice of making extra average profits over typical profits is known as super profit. when a consumer's or a buyer's advantage is greater than the usual return on invested money.