3. Goodwill is accounted in the books if
(a) It is a Purchased Goodwill
(b) It is a Self-Generated Goodwill
(c) It is decided to be accounted by the Partners
(d) Its amount is paid by the Gaining ratio
Answers
Answer:
As per 26 only purchase goodwill will be recorded in book of accounts When goodwill is purchase by the firm in a consideration in cash or kinds of cash it shown in the balance sheet.
a option is correct
Explanation:
Answer:
The correct answer is Option a - Purchased Goodwill
Only purchased goodwill will be reflected in the book of accounts in accordance with Accounting Standard 10 The balance sheet is updated when goodwill is acquired by the company for a cash consideration or other types of cash.
Explanation:
This goodwill is created when a company is bought or acquired for factors like brand recognition, client base, professional relationships, etc. Since its worth has been established through the type of payment received, it is documented in the books of accounts.
This form of goodwill is a valuable intangible asset for a business, just like any other asset, hence it must be listed under the heading Assets in the company's balance sheet.
Goodwill is valued subjectively by the seller and cannot be determined objectively.
Due to the fact that the benefit obtained from it can no longer be quantified after a given time, the benefit of goodwill can only be enjoyed for a short time. Consequently, it must be amortized.
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