Home For AAT student members AQ 2013 AAT Level 3 (Level 6 in Scotland)

Goodwill!!!!

louiselouise Feels At HomeRegistered Posts: 49
Why does the goodwill go on the cr side and the dr side when divides by dates, is like an accrual and prepayment!!

as the end of yr is mach 04 and the goodwill is for before that date (i.e to 31 Sep 03 and other to 31 Mar 04)

please clarify

louise

Comments

  • Eva82Eva82 New Member Registered Posts: 5
    Goodwill

    Hi louise,

    I would have to check my notes but as far as I can remember goodwill reflects the value of the business on the market. It is an asset to the business.

    Would that help?
    Eva
  • crispycrispy Trusted Regular SouthamptonRegistered Posts: 456
    Hello,

    I assume this is for a partnership question?

    Goodwill will appear as a Debit entry when it is created, and a Credit when it has been eliminated from the Accounts.

    For example if a new partner enters a partnership, Goodwill is first created in the old partnership profit share agreement ie:
    Dr Goodwill
    Cr Partner A Capital A/c
    Cr Partner B Capital A/c

    And then eliminated in the new partnership agreement:
    Dr Partner A Capital A/c
    Dr Partner B Capital A/c
    Dr New Partner C Capital A/c
    Cr Goodwill

    I think this is right :confused1:
  • louiselouise Feels At Home Registered Posts: 49
    thankyou for that !! :lol:
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