Valuing goodwill can be complex. It often involves financial analysis and expert evaluation. Common methods include:
Excess Earnings Method: This method calculates goodwill by evaluating the extra earnings a business generates beyond a normal rate of return on its tangible assets. Market Approach: This approach estimates goodwill based on market data, comparing similar companies that have been sold recently. Income Approach: This method projects future cash flows attributable to goodwill and then discounts them to present value.