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Question
Under which of the following method Goodwill account is raised in the books of accounts.
Under which of the following method Goodwill account is raised in the books of accounts.
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Solution
The correct option is B Revaluation Method
Goodwill is a fictitious asset which is generated in the business in due course of time. There are various factors which creates goodwill in the business like, sustainable growth of business, market repo of the organization, customer satisfaction, credit worthiness of the business etc.
As the time passes, the assets of the business get appreciated sometimes. A revaluation needs to be done for all such assets. Goodwill account is created in the books of account due to revaluation.
Goodwill is a fictitious asset which is generated in the business in due course of time. There are various factors which creates goodwill in the business like, sustainable growth of business, market repo of the organization, customer satisfaction, credit worthiness of the business etc.
As the time passes, the assets of the business get appreciated sometimes. A revaluation needs to be done for all such assets. Goodwill account is created in the books of account due to revaluation.
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