a) What is Goodwill? b) Conditions under…

Question 1 Report

a) What is Goodwill?

b) Conditions under which Goodwill is valued in a Partnership

c) Contents of a partnership agreement

Answer

Answer Details

(a) What is Goodwill?

Goodwill is the value of a business's good name, reputation, established customer connections and earning capacity over and above the value of its net tangible (identifiable) assets. It is an intangible asset that arises because a going business is worth more than the mere sum of its separable assets.

(b) Conditions under which goodwill is valued in a partnership

On the admission of a new partner.
On the retirement or death of a partner.
On a change in the profit-sharing ratio of existing partners.
On the dissolution or sale of the partnership business.
On the amalgamation of the firm with another, or its conversion into a company.

(c) Contents of a partnership agreement (deed)

Name of the firm and the names and addresses of the partners.
Nature and place of the business.
Amount of capital to be contributed by each partner.
The profit- and loss-sharing ratio.
Rate of interest on capital and on drawings.
Salaries, commission or allowances payable to partners.
Rights, duties and powers of each partner.
Procedure for admission, retirement, death and dissolution.
Method of valuing goodwill.
Keeping and auditing of accounts, and settlement of disputes (arbitration).

Read lesson note on Partnership Accounts (WAEC)

Read lesson note on Miscellaneous Accounts (WAEC)

Partnership Accounts

Miscellaneous Accounts

View Answer

a) What is Goodwill? b) Conditions under which Goodwill is valued in a Partnership c) Contents of a partnership agreement

Related Questions

Download The App On Google Playstore