A,B,C are partners sharing profit in the ratio of 3:2:1. A retiresc& his capital after making adjustments for reserves and profits on revaluation stands at Rs . 74,000. B & C agreed tonpay him Rs.80,000 is full settlement of his claim. give entry for goodwill.
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Answers
Answer:
A's Capital A/c Dr. 25,000
B's Capital A/c Dr. 55,000
To C's Capital A/c 80,000
(C's share of goodwill adjusted to the capital accounts
of A and B in their gaining ratio 1 : 5 and adding additional 6000 as goodwill for settlement)
Goodwill is an intangible asset associated with the acquisition of one business by another. It represents value that can provide a competitive advantage to the acquiring company.
A goodwill definition is the portion of the purchase price that is greater than the sum of the net fair value of all assets acquired and liabilities assumed in the transaction.
Aspects of goodwill include the value of a company's name, brand reputation, loyal customer base, solid customer service, good employee relations, and proprietary technology. This is why one company may pay a higher price for another.The value of goodwill typically arises during a company acquisition. The amount paid for the target company by the acquiring company that is greater than the target's net assets at fair value usually accounts for the value of the target's goodwill.
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