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Why is future maintainable profit used in goodwill valuation?

Answer and explanation

Correct answer: Because goodwill is based on future earning capacity

Goodwill value is linked with future regular profit. Therefore sustainable profit after removing abnormal items is used.

Related tags

GoodwillFuture Maintainable ProfitConceptPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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