What Is Goodwill ? Why should a new Partner be called upon to pay for Goodwill ?

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Gunalan Venugopal

Online tutor - M.Sc (IIT),M.Ed - Physics -25 yrs Experienced - Chennai TN - Micro-teaching

The established reputation of a business regarded as a quantifiable asset and calculated part of its value when it is sold. Due to Admission of a new partner, old partners have to share their value of goodwill created till date.
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Goodwill is the value of a business entity not directly attributable to its assets and liabilities, and is earned by providing quality, consistently and acts as a brand. It is not reflected in the P&L statement but shows the confidence of the market in the name of the enterprise. Any new partner...
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Goodwill is the value of a business entity not directly attributable to its assets and liabilities, and is earned by providing quality, consistently and acts as a brand. It is not reflected in the P&L statement but shows the confidence of the market in the name of the enterprise. Any new partner is asked to pay for goodwill as it's a 'future value' of the business and needs to be accounted for any investment which will reflect the true valuation of the enterprise. read less
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The term "Goodwill" relates to business matters and is defined as an intangible entity that comes when a company acquires new business into any field. A new partner should be paid upon because it is looked like a kind gesture as he will bring more business and sho existing company must share the goodwill...
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The term "Goodwill" relates to business matters and is defined as an intangible entity that comes when a company acquires new business into any field. A new partner should be paid upon because it is looked like a kind gesture as he will bring more business and sho existing company must share the goodwill of the profit earned to date. Hence old partners in business wanta contributionfroma new partnerfor their compromise in the value ofgoodwillfora new partner.The new partnerwould compensate to former partners in their sacrificing ratio. read less
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