0Goodwill is the reputation being enjoyed by an organization. This is reflected normally in their higher profit earning capacity over competing firms in the same industry. Otherwise, the firm is utilising it's capital or capacity better than its competing firms in the industry.
The need for accounting for goodwill arise when there is reconstitution of the partnership or sale or purchase of business.
Usually, goodwill is valued at no of years maintenance of average profits or super profits. As a refined method, goodwill is valued basis annuity considering the time value of money or it's present value.
