Which of the following factors affects the value of goodwill?
Ans – d) Explanation:- Favorable Location, Favourable Contracts, and Efficiency of Management affect the value of goodwill.
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Which of the following is not true in relation to goodwill?
Ans – b) Goodwill is not a fictitious asset as it has a realisable value and help business to generate more profit with less effort.
Goodwill is not accounted in the books if
Ans – b) Explanation:- As per the AS – 26, Self-generated goodwill is not recorded in the books as no consideration is paid against it.
Assertion (A): Goodwill is an intangible asset and is recognised as an asset only when consideration is paid for it.
Ans – b) Explanation:- Goodwill is an intangible asset and is recognised as an asset only when consideration is paid for it as per AS 26.
Assertion (A): Goodwill is valued at the time of the firm’s reconstitution because gaining partners have to compensate the sacrificing partners for gaining profit share.
Ans – a) Explanation:- Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
Assertion (A): Self-generated Goodwill is recognised in the books of account on reconstitution of a firm because the amount is exchanged between the gaining partner or partners and sacrificing partner or partners.
Ans – d) Solution:- Self-generated Goodwill is not recognised in the books and not recorded because the value is not paid for it. Thus, Assertion (A) is not correct but the Reason (R) is correct.
Assertion (A): Goodwill is an intangible asset because of which an enterprise is likely to earn higher profits without putting in extra efforts.
Ans – b) Explanation:- Goodwill is an intangible asset and does not have any physical existence. Goodwill is the reputation that a business enjoys as a result of its good service and product. The customers prefer and also recommend to…
From the following information, Calculate the value of goodwill of the firm:
Solution:-
A business has earned an average profit of ₹ 8,00,000 during the last few years and the normal rate of return in a similar business is 10%. Find the value of goodwill by:
Solution:-
The average profit of GS & Co. is ₹ 50,000 per year. The average Capital Employed in the business is ₹ 3,00,000. If the normal rate of return on capital employed is 10%. Calculate the goodwill of the firm by:
Solution:-