Archive about 'Goodwill Accounting'

Basic Bookkeeping Treatment or Double Entry of Goodwill

Tweet Basic bookkeeping or double entry for taking up or writing off goodwill in the books of account of a business:When goodwill is ACQUIRED: Debit      Goodwill Account Credit     Capital Account When goodwill is WRITTEN OFF: Debit      Profit or loss or Capital Account Credit    Goodwill Account When will we need to value or evaluate goodwill? As […]

When will we need to value goodwill?

Tweet When will we need to value or evaluate goodwill?As goodwill is an intangible asset (invisible and not physical asset), hence it is generally not valued in the books of account of a business. Situations where goodwill valuation re necessary: When the owner wish to make a claim for the goodwill which he or she […]

What are the major factors that give rise to goodwill?

Tweet Generally, the more established a business is, there is better chance of getting better goodwill than a similar business which has been newly started. A new business does not have any goodwill. Major factors which affects goodwill are: (a)    Personality of the owner (b)   Reputation for the service and quality of goods (c)    Favorable […]

Some consider Goodwill as a Fictitious Asset. Do you think this statement is correct.?

Tweet Some of us draw the conclusion that goodwill is a fictitious asset since it is an “ invisible” item – re: cannot be seen or touch.It might be true that goodwill is an intangible asset, but it cannot be called a fictitious asset because: Even though these intangible assets (examples beside goodwill are patents […]

Content Page On Goodwill, Valuation And Accounting Treatment

Tweet 1.0 Part 1: How Goodwill arises and the definition of Goodwill 2.0 Part 2: Factors affecting Goodwill & Various Method of Goodwill Valuation 3.0 Part 3: Valuation of Goodwill On Entry Of New Partner or Retirement of Old Partner 4.0 Part 4: Valuation of Goodwill by the Arbitrary Assessment Method 5.0 Part 5: Valuation […]

Valuation of Goodwill By The Capitalization Of Expected Future Net Profits

Tweet This Part 5 looks at the valuation of goodwill using the capitalization of expected future net profits. Situation where Capitalization of Expected Future Net Profits is viable when there are clear steps that the following can be undertaken: Step 1: to ascertain the average future net profit that is expected to be earned. The […]

Goodwill On Entry Of New Partner Or Retirement or Death Of Old Partner

Tweet In Part 2, we understand the various methods of valuing goodwill. This article deals with one of the normal way of computing or valuing goodwill particularly in a partnership whether at the time of a new partner, or the retiring or death of an old partner. Goodwill Valuation: Average annual net profit x an […]

Valuation Of Goodwill By The Arbitrary Assessment Method

Tweet Valuation Of Goodwill By The Arbitrary Assessment Method In this Arbitrary Assessment Method either the purchaser or seller or both parties may estimate the value to be placed on the goodwill This method normally applies in situations where the profits cannot be used as a guide to future profit like in cases where: No […]

Goodwill Valuation- Factors Affecting Valuation & Various Methods

Tweet Goodwill depends on many factors like: the nature/type of the business, the type of customer which such a business is inherently likely to attract, the expenditure already made in advertisements & promotions establishing the business, the reputation existing and the probabilities of the market. [As described earlier, goodwill consists of the advantages a business […]

How Goodwill Arises & Definition Of Goodwill

Tweet This article deals with how goodwill normally arises and what does goodwill means. Goodwill normally arises : When a partnership admits a new partner, two important things are considered: Profit adjustment whether in terms of existing and future profits and Goodwill Also, besides new partner(s) being admitted, the death or retirement of an old […]