GOODWILL - CONCEPT & ITS TYPES

GOODWILL- meaning, need, features, types of goodwill

1. GOODWILL-CONCEPT
& TYPES
PRESENTED BY--
DR. JYOTIKHARE
ASSOCIATE PROFESSOR
GOVT. DEGREE COLLEGE,
MALDEVTARAIPUR DEHRADUN

2. WHAT IS GOODWILL?
•Goodwillisthevalueofthereputationofafirm.
•ToBuiltovertimewithrespecttotheexpectedfutureprofitsoverandabovethenormalprofits.
•Anyintangibleattributewhichcontributesinthelong-termtoacompany’searningpotentialcanbe
describedasgoodwill.
•Goodwillisanintangiblerealasset.
•Goodwillisaformofanunidentifiableasset.
•Goodwillisanintangibleassetarisinginthecourseofpurchaseofonebusinessbyanotherbusiness.
•Itonlyrepresentstheinherentvalueofabusinessthatcannotbetaggedanythinginparticular.
•Totheaccountant,therefore,goodwillmaybesaidtobethatelementarisingfromthereputation,
connection,orotheradvantagespossessedbyabusinesswhichenablesittoearngreaterprofitsthan
thereturnnormallytobeexpected
•

3. FEATURES OF GOOWILL
•Be an intangible asset which cannot be seen; but it has some realisablevalue.
•Not a fictitious asset.
•It cannot be separated from the business like a physical asset can;
•Its value is not relative to any investment amounts or costs;
•This value is subjective and depends on the person (customer) judging it; and

4. ELEMENT TO ARISE OR RAISE
‘ GOODWILL’
•1.The location of the business premises, the nature of the firm’s products or the
reputation of its service.
•2. The possession of favourablecontracts, complete or partial monopoly, etc.
•3. The personal reputation of the promoters.
•4. The possession of efficient and contented employees.
•5. The possession of trade marks, patents or a well-known business name.
•6. The continuance of advertising campaigns.
•7. The maintenance of the quality of the firm’s product and development of the
business with changing conditions

5. FACTORS AFFECTING THE VALUE OF
GOODWILL
•(a) Locational Factor:
•(b) Time Factor: (period, years )
•(c) Nature of Business: (The nature of goods; Risk involved; Monopolistic nature of
business; Benefits of Patents and Trade-marks; and(year considerable) Easy access of raw
materials, etc.)
•(d) Capital Required: (small capital & high profit)
•(e) Trend of Profit: (the trend of profit is always rising)
•(f) Efficiency of Management:
•(g) Other Factors: (Condition of the money market, Possibility of competition, Government
policy; and, Peace and security in the country.)

6. TYPES OF GOODWILL
cat Goodwill
Cat Goodwill
Dog Goodwill
Rat Goodwill
Rabbit Goodwill

7. THANK YOU