State the order of steps required for valuation of goodwill using weighted Average Profit method.
A. Assign weights to each year's profit/loss
B. Multiply weighted average Profit with number of years purchase
C. Find goodwill
D. Calculate adjusted profit
E. Calculate weighted average profit Choose the correct answer from the options given below:

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E, A, D, B, C

E, A, D, C, B

D, E, A, B, C

D. A, E, B, C

Correct Answer

D. A, E, B, C

Detailed Explanation

D. Calculate adjusted profit: Calculate the adjusted profit by considering any necessary adjustments like abnormal gains or losses.

A. Assign weights to each year's profit/loss: Assign appropriate weights to the profit or loss of each year based on their significance.

E. Calculate weighted average profit: Determine the weighted average profit by using the weights assigned to each year's profit/loss.

B. Multiply weighted average Profit with the number of years of purchase: Multiply the weighted average profit by the number of years of purchase to determine the value of goodwill.

C. Find goodwill: Calculate the goodwill value based on the above steps.

So, the correct order is:

D, A, E, B, C

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