Introduction

GOODWILL IN PARTNERSHIP ACCOUNTS

Introduction

Goodwill is the good name or reputation of the business which brings benefit to the business. It enables the business to earn more profit. It is the present value of a firm’s future excess earnings. It is an intangible asset as it has no physical existence. It is shown under fixed assets in the balance sheet.

An old and well established business entity develops a good name and reputation among the public over a period of time, because of various reasons such as good quality of goods and services, location of the business, etc. This enables the business to earn more profit compared to a new business. The monetary value of such advantage is termed as goodwill.