goodwill when books not opened in books

[hardik]

pls can ne1 xplain me what does valuing goodwill mean when not opened in books.............pls dont give any formula or theoritical answer.........................pls xplain practically

 

[hardik]

sry..................title is somewhat wrong

 

[parthrocks]

pls can ne1 xplain me what does valuing goodwill mean when not opened in books.............pls dont give any formula or theoritical answer.........................pls xplain practically

there will be two entries for this....as it is nt kept in the books,it will be
1.Goodwill
To Capital a/c
the amount of goodwill distributed will be in The old PROFIT SHARING RATIO....PSR....

the second entry will be.... the opposite
1.Capital a/c
To Goodwill (in the new PSR)this will also be distributed to the new partner who comes into the partnership....

as u said u dnt want any formula or theoreotical answers this isnt a formula..its an entry that will be required when dealing with not keeping goodwill in accounts,........and theoretical answers...no no......it doesnt seem to be.....ITS QUITE INTERESTING....THE TOPIC JUST REQUIRES A DEEP ANALYSIS OF THE GOODWILL KEPT IN THE BOOKS AND GOODWILL NOT KEPT....HOPE U UNDERSTOOD...like this

 

[hardik]

but can u tell what is the purpose of valuing goodwill when not opened in books.....................because the overall value of business remains same.
see, like partners capital account balance increases when goodwill is maintained in books......what is the whole damn thing we get by valuing goodwill and then not maintaining it in books.................