Which of the following is NOT a method of valuation of goodwill?

The commonly recognized methods for valuation of goodwill are:

Average Profit Method: Goodwill is calculated by multiplying the average profits of past few years by a specified number of years of purchase.

Formula: Goodwill = Average Profits × Number of Years of Purchase

Super Profits Method: Super profit represents excess of actual average profits over normal profits. Goodwill is calculated by multiplying super profits by a specified number of years of purchase.

Formula: Goodwill = Super Profits × Number of Years of Purchase

Where, Super Profits = Average Profits - Normal Profits

Capitalisation Method: This method has two approaches:

a) Capitalisation of Average Profits: Total value of business is found by capitalizing average profits at normal rate of return. Goodwill is the excess of this capitalized value over actual capital employed.

Formula: Goodwill = (Average Profits × 100/Normal Rate of Return) - Capital Employed

b) Capitalisation of Super Profits: Super profits are capitalized at normal rate of return to find goodwill.

Formula: Goodwill = Super Profits × 100/Normal Rate of Return

"Average super profit capitalization method" is not a recognized method. This appears to be a combination of incorrect terminology. We either capitalize average profits or we capitalize super profits - but there is no concept of "average super profits" being capitalized as a separate method.

Therefore, Option 4 is the correct answer.