Under which method No. of Year's Purchase are not considered

Number of Years' Purchase is a multiplier applied to profits to determine the value of goodwill. Let's examine each method:

Simple Average Method

Goodwill = Average Profit × Number of Years' Purchase

This method directly uses the number of years' purchase.

Weighted Average Method

Goodwill = Weighted Average Profit × Number of Years' Purchase

This method also uses the number of years' purchase as a multiplier.

Super Profit Method

Goodwill = Super Profit × Number of Years' Purchase

Where Super Profit = Actual Profit - Normal Profit

This method multiplies super profit by the number of years' purchase.

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Capitalization Method

This method values goodwill using the Normal Rate of Return (NRR) instead of number of years' purchase.

Two approaches exist:

Approach 1: Goodwill = Capitalized Value of Average Profit - Net Assets

Where Capitalized Value = $\frac{\text{Average Profit} × 100}{\text{Normal Rate of Return}}$

Approach 2: Goodwill = $\frac{\text{Super Profit} × 100}{\text{Normal Rate of Return}}$

In the capitalization method, profits are capitalized using a rate (percentage), not multiplied by years. The concept of "years' purchase" is completely absent here, as we're converting profit into capital value using a rate of return instead of a time period.

Therefore, Capitalization Method does not consider Number of Years' Purchase.