Question on: JAMB Accounting - 2024
Goodwill is taken into account in partnership business when:
A
the business is being dissolved
B
the business has good customer relations
C
a new partner is admitted
D
when the business is making huge profit
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Correct Option: C
Goodwill represents the intangible value of a business. In partnerships, goodwill is recognized mainly when a new partner is admitted, as the new partner may compensate existing partners for the established value of the business.
It may also be valued during dissolution, but the most direct and common reason is admission of a new partner.
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