partner(s) by the
9. Goodwill is valued with a purpose to compensate
partners
of winting nartners which results in an end of the existing
Answers
Answer:
Meaning of Goodwill
Goodwill is the value of the reputation of a firm built over time with respect to the expected future profits over and above the normal profits. A well-established firm earns a good name in the market, builds trust with the customers and also has more business connections as compared to a newly set up business. Thus, the monetary value of this advantage that a buyer is ready to pay is termed as Goodwill.
The buyer who pays expects that he will be able to earn super profits as compared to the profits earned by the other firms. Thus, it can be said that goodwill exists only in case of firms making super profits and not in case of firms earning normal profits or losses. It is an intangible real asset which cannot be seen or felt but exists in reality and can be bought and sold.
Browse more Topics under Admission Of A Partner
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Adjustment of Capital and Change in Profit Sharing Ratio Among Existing Partners
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