Goodwill in liabilities side
This query is : Resolved
E.K.Raghavendra
(Querist)
12 June 2008
Goodwill will be shown in asset side, then what is its effect in liabilities side?
Chintan Gajjar
(Expert)
24 June 2008
Dear Friend,
If the business is owned from the beginning, Capital will be high.
If they have purchased business then they might have paid for the same hence there will be no effect on liability side (Cash will decrease and Goodwill will arise hence no effect on total of Asset side.) If there is no payment then account of the peson from whom the business is purchased will be shown under liablity side.
Regards,
Chintan
If the business is owned from the beginning, Capital will be high.
If they have purchased business then they might have paid for the same hence there will be no effect on liability side (Cash will decrease and Goodwill will arise hence no effect on total of Asset side.) If there is no payment then account of the peson from whom the business is purchased will be shown under liablity side.
Regards,
Chintan
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