Question

Why Is Goodwill Not a Fictitious Asset?

Answer 1

Fictitious assets have no tangible or physical existence and any realizable value, but they always represent actual cash expenditure, that is charged from the profit.

Whereas, goodwill is not an expense and it takes time to build. It cannot be touched or felt, that’s why it is intangible, but goodwill has a realizable value.

That is why goodwill is not considered a fictitious asset.

Also read:

• Methods of Valuation of Goodwill
• Why Do We Debit Goodwill Account While Distributing It Amongst Old Partners
• Treatment of Goodwill
• MCQs on Goodwill
• Intangible Asset