PPT : Treatment of goodwill in Partnership Accounts - 1 | Accountancy Class 12 - Commerce PDF Download

 Page 1


Treatment of Goodwill in 
Partnership Accounts 
CPT Section A Fundamentals of Accountancy 
Chapter 8 Unit 2 Part 1 
CA. Ajay Lunawat 
 
Page 2


Treatment of Goodwill in 
Partnership Accounts 
CPT Section A Fundamentals of Accountancy 
Chapter 8 Unit 2 Part 1 
CA. Ajay Lunawat 
 
Learning objectives 
What is Goodwill 
Methods of Valuation of Goodwill 
Understand when does the need for valuation 
of goodwill arise 
Learn the accounting of goodwill 
Page 3


Treatment of Goodwill in 
Partnership Accounts 
CPT Section A Fundamentals of Accountancy 
Chapter 8 Unit 2 Part 1 
CA. Ajay Lunawat 
 
Learning objectives 
What is Goodwill 
Methods of Valuation of Goodwill 
Understand when does the need for valuation 
of goodwill arise 
Learn the accounting of goodwill 
What is Goodwill 
Goodwill is the value  
of reputation of a firm 
in respect of profits  
expected in future over and above 
the normal rate of profits. 
Page 4


Treatment of Goodwill in 
Partnership Accounts 
CPT Section A Fundamentals of Accountancy 
Chapter 8 Unit 2 Part 1 
CA. Ajay Lunawat 
 
Learning objectives 
What is Goodwill 
Methods of Valuation of Goodwill 
Understand when does the need for valuation 
of goodwill arise 
Learn the accounting of goodwill 
What is Goodwill 
Goodwill is the value  
of reputation of a firm 
in respect of profits  
expected in future over and above 
the normal rate of profits. 
Reasons of Excess Profit 
Excess profit earned by a firm may be due to its 
Locational 
advantage  
Better 
customer 
service 
Possession of 
a unique 
patent right 
Personal 
reputation of 
the partner 
For similar 
other reasons 
Page 5


Treatment of Goodwill in 
Partnership Accounts 
CPT Section A Fundamentals of Accountancy 
Chapter 8 Unit 2 Part 1 
CA. Ajay Lunawat 
 
Learning objectives 
What is Goodwill 
Methods of Valuation of Goodwill 
Understand when does the need for valuation 
of goodwill arise 
Learn the accounting of goodwill 
What is Goodwill 
Goodwill is the value  
of reputation of a firm 
in respect of profits  
expected in future over and above 
the normal rate of profits. 
Reasons of Excess Profit 
Excess profit earned by a firm may be due to its 
Locational 
advantage  
Better 
customer 
service 
Possession of 
a unique 
patent right 
Personal 
reputation of 
the partner 
For similar 
other reasons 
Methods of Valuation of 
Goodwill 
Average profit basis 
Super profit basis 
Annuity basis 
Capitalisation basis