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    Cfi Upload Goodwill

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    Lalit mohan Pradhan
    Dog, cat, and rat goodwill refer to different types of reputation depending on whether it is attached to a person, place, or difficult to attribute. Created, acquired, and purchased goodwill refer to how goodwill is obtained, such as through internal accounting adjustments, asset purchases, or direct payment. Declared goodwill is reported on the balance sheet while hidden goodwill is not reported despite existing.

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    Cfi Upload Goodwill

    Uploaded by

    Lalit mohan Pradhan
    9 views3 pages
    Dog, cat, and rat goodwill refer to different types of reputation depending on whether it is attached to a person, place, or difficult to attribute. Created, acquired, and purchased goodwill refer to how goodwill is obtained, such as through internal accounting adjustments, asset purchases, or direct payment. Declared goodwill is reported on the balance sheet while hidden goodwill is not reported despite existing.

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    Dog, cat, and rat goodwill refer to different types of reputation depending on whether it is attached to a person, place, or difficult to attribute. Created, acquired, and purchased goodwill refer to how goodwill is obtained, such as through internal accounting adjustments, asset purchases, or direct payment. Declared goodwill is reported on the balance sheet while hidden goodwill is not reported despite existing.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    9 views3 pages

    Cfi Upload Goodwill

    Uploaded by

    Lalit mohan Pradhan
    Dog, cat, and rat goodwill refer to different types of reputation depending on whether it is attached to a person, place, or difficult to attribute. Created, acquired, and purchased goodwill refer to how goodwill is obtained, such as through internal accounting adjustments, asset purchases, or direct payment. Declared goodwill is reported on the balance sheet while hidden goodwill is not reported despite existing.

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    SIMPLE ACCOUNTING-SECRETS – 3

    GOODWILL

    Since BUCKS is common to all currencies, the same may have


    been used. Please substitute the word with the currency of your
    country

    Regret, I am nor computer-savvy. Kindly excuse errors in


    formatting.

    In the simplest of terms, GOODWILL is the reputation of a person,


    organisation or a place. A lovable actor, a well-known organisation or a
    popular place, all have a reputation and command a higher price.

    There are different types of goodwill

    Depending on the inherent characteristics, we have

    Dog Goodwill
    Cat Goodwill and
    Rat Goodwill

    Just like a dog follows its master wherever he goes, if goodwill follows
    the person wherever he goes, it is known as DOG GOODWILL.
    Reputation of celebrities is generally DOG GOODWILL.

    If an owner of a pet cat shifts to another place, the cat too goes along
    with him. But, it makes it a point to visit its earlier location on a regular
    basis. Similarly, if the reputation is attached to a place and not an
    organisation or a person, then it is CAT GOODWILL. For instance,
    whoever does business in whichever product in a well-known place or a
    commercial location, his business, generally, is successful. This is CAT
    GOODWILL.
    Sometimes, when a movie is very successful and it becomes difficult to
    pinpoint the reason for its success, it is RAT GOODWILL. Just like a
    rat, escaping a burning house, scampers here and there not knowing
    where to go, in this case too, it is difficult to make out whether the
    movie became a hit because of the acting, direction, stunts, music, etc.
    This is RAT GOODWILL.
    Depending on possession, we have

    Created Goodwill
    Acquired Goodwill
    Purchased Goodwill

    Let us take for example, a firm, with three partners, wanting to take in
    one more partner. Existing partners surely wouldn’t want to share the
    advantages of reputation they have built over a period of time just like
    that with anyone without any consideration. So, they ask the incoming
    partner to bring additional amount to compensate the existing partners.

    In case, the incoming partner is unable to make it, the existing partners
    create a ‘Goodwill A/c’ on the assets side of the balance sheet and to
    match the same, enhance their own capital accounts, in agreed
    proportions, by just making book entries without bringing any
    additional cash. In this way, they are assured of higher share in profits in
    future after the admission of the new partner. This is called CREATED
    GOODWILL.

    Firm A, convinced that it is worth buying the assets of firm B for 10,000
    bucks, goes ahead with its plans. After the transaction, it draws up the
    accounts and finds the total value of the assets to be 8,000 bucks. Still it
    is convinced that it was worth paying 10,000 bucks. The balance of
    2,000 bucks is ‘goodwill’ which is reflected on the assets side of the
    balance sheet. This is ACQUIRED GOODWILL.
    If firm A, before hand itself, comes to an understanding with firm B that
    assets would be purchased at 8,000 bucks and an additional amount of
    2,000 bucks would be paid for ‘goodwill’, then this goodwill, reflected
    in the balance sheet, is the PURCHASED GOODWILL.

    Depending on the disclosure, we have


    Declared Goodwill and
    Hidden Goodwill.

    As the name suggests, goodwill reflected in the balance sheet, is the


    DECLARED GOODWILL.

    In spite of a good reputation, if the firm decides not to reflect the


    goodwill by alterations to the capital, that is HIDDEN GOODWILL.

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