what is the logic of... not to show goodwill in BOA... In case of partnership... Please explain in detail
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Quick Summary
This discussion clarifies why goodwill isn't typically shown on a Balance Sheet for partnerships. It explains that goodwill is subjective and only purchased goodwill, a financial transaction, is recorded. Unlike recall value, recorded goodwill is subject to annual impairment testing.
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.