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in Accounting for Partnership – Basic Concepts by (25.6k points)
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A business has been purchased by a firm for Rs. 1,00,000. But its net tangible assets were worth Rs. 92,000. 

1. What does this difference in value indicate? 

2. Where is it shown in the Balance sheet of the firm?

1 Answer

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Total value of business-Net Assets = Value of goodwill 1,00,000 – 92,000 = 8,000 So ‘Rs. 8000’ implies the value of goodwill of the rm. Goodwill refers to the value of reputation of a business. It is an intangible asset. So it is shown on the asset side of B/S.

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