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Define Goodwill....

Define Goodwill.

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Goodwill is an intangible asset associated with the purchase of one company by another. Specifically, goodwill is recorded in a situation in which the purchase price is higher than the sum of the fair value of all identifiable tangible and intangible assets purchased in the acquisition and the liabilities assumed in the process.
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When The Goodwill Is Already Appearing In The Books

Jaya, Kirti, Ekta and Shewata are partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2: 1 . On Jaya's retirement, the goodwill of the firm is valued at Rs. 36,000. Kirti, Ekta and Shweta decided to share future profits equally. Record the necessary journal entry for the treatment of goodwill without opening 'Goodwill Account'.

Knowledge Check

  • Goodwill is

    A
    an intangible asset
    B
    a fictitious asset
    C
    Both (a) and (b)
    D
    None of these

  • Goodwill is

    A
    an intangible asset.
    B
    a fictitious asset.
    C
    Both (a) and (b)
    D
    None of these.

  • If the incoming partner is to bring in premium of goodwill in cash and also a balance exists in the Goodwill Account, then this Goodwill Account is written off among the old partners in

    A
    the new profit-sharing ratio.
    B
    the old profit-sharing ratio.
    C
    the sacrificing ratio.
    D
    None of the above.

    • Similar Questions

    Explore conceptually related problems

    Jaya, Kirti, Ekta and Shewata are partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2: 1 . On Jaya's retirement, the goodwill of the firm is valued at Rs. 36,000. Kirti, Ekta and Shweta decided to share future profits equally. Record the necessary journal entry for the treatment of goodwill without opening 'Goodwill Account'.

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    Goodwill is a

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