One advantage of the excess-earnings method is that it offers an estimate of goodwill.

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The excess-earnings method calculates the value of a business by adding up the fair market value of its net tangible assets and the present value of its expected future excess earnings. The excess earnings are the difference between the earnings that can be attributed to the tangible assets and the actual earnings of the company. This method often provides an estimate of the value of goodwill, which is the intangible value of a business that arises from its reputation, customer relationships, and other non-physical assets. Therefore, the statement is true.

One Advantage of the Excess-Earnings Method Is That It Offers