goodwill

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:31AM in AAT student discussion
:( Hi Can anyone explain what is meant by goodwill. I dont really understand what it means.

Why is it important to consider valuing goodwill when a new partner joins a partnership

can anyone please help me i feel really down, I dont think I will pass the exam in June. Anyone else feeling the same.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:goodwill

    Goodwill is essentially the value of a business over and above its balance sheet valuation. Goodwill can cover a range of 'intangible' assets such as a company's reputation, client list, location, quality of its workforce and so forth. It is generally, not a fixed sum, but is negotiated when there are changes in a partnership.

    When a new partner joins a business, part of his capital invested is used to 'buy' his/her share of the goodwill from the existing partners, so it's important to know how much this is to be.

    Hope that helps a bit.

    Chris

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:goodwill

    Hi chris
    thanks for replying to my message, it makes sense now.
    alynig

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