 |
| Chapter-3 |
Goodwill class 12 Accountancy
Goodwill class 12 Accountancy-Hello students welocme to ankitcommerce.com .Today in this article we gonna discuss one of the important topic of class 12th accountancy which is goodwill nature and valuation
Meaning : It is an intangible asset which places an enterprise at an advantageous position due to which the enterprise is able to earn higher profits without putting extra efforts.
1. It is an intangible asset, i.e., it does not have physical existence. Hence, it cannot be seen or touched.
2. It does not have an existence separate from that of an enterprise. Thus, it has realisable value when business is sold.
3. It helps in earning higher profits.
4. It is an attractive force which brings in customers regularly to the place of business.
5. It comes into existence due to various factors such as locational advantages, favourable contracts, brands, trademarks, patents, market reputation, etc.
2. It does not have an existence separate from that of an enterprise. Thus, it has realisable value when business is sold.
3. It helps in earning higher profits.
4. It is an attractive force which brings in customers regularly to the place of business.
5. It comes into existence due to various factors such as locational advantages, favourable contracts, brands, trademarks, patents, market reputation, etc.
Need for Valuing Goodwill
1. When there is a change in the profit-sharing ratio.
2. When a new partner is admitted.
3. When a partner retires, or dies.
4. When partnership firm is sold as a going concern.
5. When two or more firm amalgamate.
6. When a partnership firm is converted into a company.
Factors affecting the value of Goodwill
1. Efficient Management
2. Favourable Location
3. Longer establishment of business
4. Quality of products
5. Market Situation
6. Risk Associated with business
7. Nature of business
Types of Goodwill
1. Purchased Goodwill = It is that goodwill which is acquired by a firm for a consideration, whether paid in cash or kind.
2. Self-generated Goodwill or Non-purchased Goodwill = It is the goodwill which is not purchased for a consideration but is earned by the efforts of the management (or partners). It is an internally generated goodwill which arises from a number of factors (such as favourable location, efficient management, good quality of products, etc.) that a running business possesses due to which it is able to earn higher profit.
Thanks for reading this article please please read more article realted to this
Read Also-
0 Comments