At the time of reconstructions of partnership firm business assets and liabilities are revaluated with this, the value of goodwill is also to be decided.
(i) For business goodwill is an intangible assets included in the group of non-current assets.
(ii) Intangible assets cannot be seen but it has its value in the market over a period of time, a well-established business develops an advantage of good name, reputation and wide business connections which benefits the business. Monetary value of such advantage is the main reason for the goodwill.
(iii) Goodwill does not exists in those business which earn normal profit or incur loss.
(iv) Goodwill is shown in the balance sheet on the assets side under the head of noncurrent assets as intangible asset.
