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Goodwill in case of partnership

CHAITRI SUDHAKARBHAI KHAROD (ARTICLE) (752 Points)

26 May 2020

what is the logic of...
not to show goodwill in BOA...
In case of partnership...
Please explain in detail

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2 Replies

CA Raj Doshi (Practising CA) (8735 Points)
Replied 27 May 2020

Goodwill is a subjective concept. The value of goodwill varies from one person/valuer to another person/valuer. Goodwill Is different from Recall Value. The Company "Nestle" for example has a good recall value but does not mean it also has goodwill. As per Accounting standards, only purchased goodwill is recorded in the books of accounts as it a financial transaction and not a valuation report just for the sake of measuring goodwill on voluntary basis. Goodwill recorded in BOA is subject to annual impairment testing.