CertifiedThis class is for class 12 accounts, this week will discuss about Profit sharing ratio, and necessary journal entries like goodwill, reserves and accumalated profits, etc
The courses covers
Gaining ratio, sacrificing ratio, New ratio, calculate of good will under different types,
- Purchased Goodwill:This arises when a business is acquired for a price higher than the fair value of its identifiable net assets (assets minus liabilities). It represents the value of the business's reputation and other intangible assets that are not separately identifiable.
- Inherent Goodwill:This is the value of a business that is generated internally, over time, due to factors like a good reputation, strong customer relationships, or the quality of its products or services. It's also known as self-generated or non-purchased goodwill.,
is very difficult to assess the value of goodwill, as it is an intangible asset. In case of sale of a business, its value depends on the mutual agreement between the seller and the purchaser of the business. Usually, there are three methods of valuing goodwill:
1. average profit method
2. Super profit method
3. Capitalization method,
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Certified
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