Question

52. If X pays Rs.1,50,000 as his share of
goodwill to Y (Privately) an existing
partner the treatment will be
.​

Answer 1

Answer:

No accounting treatment

Answer 2

In such a case, no entry will be passed or the goodwill does not appear in books.

• Goodwill is a type of intangible asset in accounting.
• When a business looking to buy another business is prepared to pay more than the net assets' fair market worth, the concept of goodwill comes into play.
• Such items as a company's good reputation, a strong (loyal) customer or client base, brand identification and recognition, an unusually competent workforce, and proprietary technology are examples of the characteristics or factors that a company is paying extra for or that are portrayed as goodwill.
• The old partners split the goodwill in the same ratio when the new partner brings his portion in cash.
• However, no entry is made in the company's books when the new partner pays the previous partners privately in cash for the amount of goodwill.

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