Amorisation of goodwill

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mohil (Querist)

07 June 2014 Dear Experts,

What is the logic behind amortisation of goodwill in case of partnership firms & n case of companies?( although its s per AS, but i did not get the logic behind it)

Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)

07 June 2014 The logic may be if you purchase the goodwill, the effect of goodwill cant last long beyond five years. Purchased goodwill, if not maintained in terms of quality services to customers, may automatically vanish within five years. And if you wish to continue it forever, you need to create your own goodwill. This represented in terms of money, goodwill needs to be amortised in 5 years.

mohil

mohil (Querist)

07 June 2014 Thanks, i have one more query..
tax audit limit is 60 but i have seen that most ca has aound or mre than 100 tax audits..how is this possible & is there any penal provision for violating the rules if icai (just for knowledge)

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