Valuation of Goodwill

I believe that good education can change lives. I am an educator with experience of more than 6 years. I teach commerce subjects, mainly Financial Accounting, Cost Accounting, and Economics.

Talking about education, I am a Chartered Accountant and a graduate of Bachelor of Commerce (Honors) from Delhi University.

So, to summarize:

A good education can change lives. Trying my best.

Goodwill refers to the good reputation of an entity. It is an intangible asset that gives an advantageous position to the entity which helps the entity to earn extra profits without extra efforts.

Goodwill is an attractive force that brings customers back to the place of business.

For example, as Haldiram’s has delivered good services to its customers, customers come back to same the business again and again and it helps Haldiram’s earn higher profits.

Goodwill is an intangible asset. It cannot be touched and seen.

It is a subjective matter. Its valuation depends from person to person.

The goodwill is needed in the following circumstances

· Change in Profit Sharing ratio

· Admission of a partner

· Retirement/Death of a partner

· Dissolution of partnership firm

· Amalgamation of partnership firms

Goodwill is of 2 types:

· Purchased Goodwill

· Self-generated goodwill

Learn Valuation of Goodwill in this course.