Hidden Good will

366 views 1 replies
hidden Goodwill is the difference between future maintenable capital less (old capital).
how can it be justified in a conceptual manner?
Replies (1)

I tried looking at various sources, and only partnership accounts have this method of accounting, The goodwill formula is different and almost it’s like ‘new partners capital multiplied by reciprocal of his ratio minus combined capital of all three partners’. This is also known as inferred method of goodwill. The reason why the profit sharing ratio is reciprocated and multiplied with new partners capital is not a plausible explanation because, the capital is overvalued from what the partner had brought into the firm. That is why IndAS does not give any prescribed accounting treatment to partnership firms. I’ll get back to you when I find out why the profit sharing ratio is multiplied with a reciprocal like that. 

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 24 June 2026
HEAD - AUDIT AND TAXATION

A R JADHAV AND ASSOCIATES

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 24 June 2026
CA Article Trainee

Rahul Dang & Associates

Pune

CA Inter

View Details
Company
01 June 2026
Audit, Taxation & Compliance Executive

R P S K & Associates

Nashik

CA Inter

View Details
Company
29 May 2026
Company Secretary - Part time

Shaswat initial support private limited

Ahmedabad

CS

View Details
Company
ARTICLESHIP 09 June 2026
Article Trainee

Numbertree LLP

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 31 May 2026
Article Assistant

KPRS And Associates

New Delhi

CA Inter

View Details
Company
29 May 2026
Finance Head

Bhawar Sales Corporation

Chennai

Graduate (Any)

View Details
Company
22 June 2026
Finance Manager- Chartered Accountant

Triveni Turbine Limited

Bengaluru

CA

View Details