Assertion (A): Goodwill is the value of the reputation of a firm in respect of the profits expected in the future over and above the super profits.
Assertion (A): Goodwill is the value of the reputation of a firm in respect of the profits expected in the future over and above the super profits.
Reason (R): Goodwill is the present value of the expected super-profits of a firm.
In the context of the above two statements, which of the following is correct?
(a) Assertion (A) is correct but Reason (R) is wrong.
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
(c) Only Reason (R) is correct.
(d) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).
Anurag Pathak Changed status to publish April 19, 2023
Ans – c)
Explanation:-
Goodwill is the present value of the expected super-profits of a firm. Thus Reason (R) is correct.
The goodwill is not expected future profits above the super profits. Thus Assertion (A) is incorrect.
Anurag Pathak Changed status to publish April 19, 2023
