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Question
A Money or money's worth is paid for acquiring goodwill. B Super profit is earned by the enterprise. C Management of the enterprise decides to record goodwill. D Any of the above.
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Solution
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Goodwill - It is the value of reputation of a firm in respect of profits expected in future over and above the normal rate of profits. As per the provisions of accounting standard 26, goodwill is recorded in books only when the goodwill is purchased during business purchase. it means money or money's worth should be paid for acquiring goodwill to record it in books.
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