Goodwill
Querist : Anonymous
1) what is the treatment of goodwill, when goodwill has been recorded in the books, where some consideration in money or money's worth has been paid.
2) why it is important to see that, the amount paid to vendors, not presented by tangible assets has been debited to goodwill
3) And, why it is said that, it is not prudent that, goodwill shown in the company's a/c by way of writing up the value of its assets, on revaluation or writing back the amount of goodwill earlier written off by the company.
Expert's opinion requested.
Thank you.
It is because the number of days the firm is doing business and accordingly the sales is also increasing the suppliers also grant more number of days credit and hence the firm generated its reputation which allows it to create goodwill. When a new partner enters the business he gets the cocked food and he need not plant a tree but he is to just pluck the fruits. To do so some const has to be incurred or the incoming partner has to wait for the number of years to generate such a reputation. Hence, it is measured in terms of money bases on various method.
The same principal applied in the cased of company
Goodwill A/c DR
To Bank/ Other Asset given
Querist : Anonymous
thanks..
i hv posted another query regarding gratuity.
it has past 3-4 days, bt nobody answered d same.
Sir, hope u can help m for that also.
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