The factors affecting the value of goodwill of the firm are
(i) Nature of business
(ii) Efficiently of management
The values which the firm is trying to propagate are
(i) Promoting education among the students of below poverty line.
(ii) Providing quality services to customers resulting in customer satisfaction

(i) Under this method, goodwill is calculated by multiplying the weighted average profit by a certain number of years of purchase.
(ii) Goodwill = Weighted average profit x Number of years of purchase
(iii) In this method, weights are assigned to each year's profit. Weighted profit is ascertained by multiplying the weights assigned with the respective year's profit.
(iv) The sum of the weighted profits is divided by the sum of weights assigned to determine the weighted average profit
Weighted average profit
\(=\frac{Total\ of\ weighted\ profits}{Total\ of\ weights}\)

Goodwill may be classified into acquired goodwill or self-generated goodwill.
(i) Acquired or purchased goodwill:
(1) Goodwill acquired by making payment in cash or kind is called acquired or purchased goodwill.
(2) The excess of purchase consideration over the value of net assets acquired is treated as acquired goodwill.
(ii) Self - generated goodwill:
It is the goodwill which is self generated by a firm based on features of the business such as favourable location, local customers, etc. Such self-generated goodwill cannot be recorded in the books of accounts.

Following are the circumstances that require valuation of goodwill of partnership firms in order to protects the rights of the partners
(i) When there is a change in the profit sharing ratio
(ii) When a new partner is admitted into a firm
(iii) When an existing partner retires from the firm or when a partner dies.
(iv) When a partnership firm is dissolved

The nature of goodwill can be described as follows:
(i) Goodwill is an intangible fixed asset. It cannot be seen or touched.
(ii) It has a definite value depending on the profitability of the business enterprise.
(iii) It cannot be separated from the business
(iv) It helps in earning more profit and attracts more customers
(v) It can be purchased or sold only when the business is purchased or sold in full or in part