In which conditions the goodwill is calculated by the weighted average method?

14. In which conditions the goodwill is calculated by the weighted average method?

  1. When profits are fluctuating
  2. When profits in a decreasing or increasing trend
  3. When profits are not equal
  4. When losses are decreasing

Answer: B) When profits in a decreasing or increasing trend

Explanation:

In the weighted average method, loads are appointed to the benefits of every year with more weightage for the new years. The altruism is determined by increasing the weighted normal benefit with the number of long stretches of procurement. Assuming that the benefits are seen to be steady over a time of not many years then there should be equivalent weightage given for every one of the years which is the straightforward normal strategy. What's more, if the benefit is fluctuating each year, the inclination movements to weighted normal technique with important weightage given to benefits got from ongoing years.

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