In most of the sample papers of accountancy,some adjustments are being given for goodwill such as-
"Pass entries assuming that the partners do not want g/w to appear in the b/s."
"Goodwill was raised at its full value"
What will be the treatment for these ? Is it being given just to cnfse the students /there is some significance of it? kindly reply.
If goodwill is given in balance sheet you have to divide it to debit side of partner's capital account. If it is given in adjustment and written that goodwill shouldn't appear then it is self generated goodwill and you just have to use that goodwill to calculate amount brought in by new partner, compensated to retiring partners etc. In short you should bring goodwill in books only if money or money's worth is paid for as per accounting standard 10.so you should never bring goodwill given in adjustment to new balance sheet