Assignment KI DUNIYA

What do you understand by valuation of goodwill and Explain  the method of valuation of  goodwill ? Introduction of Valuation of  Goodwill :- Goodwill is primarily an intangible asset that is related to the purchase of one company by another. The concept covers such portion of the purchase price, which is higher than the total of the net fair value of the assets that have been bought.  The importance of goodwill may be understood by its importance for increasing the business value. It is also instrumental in acquiring more customers. In common parlance, the goodwill of a company is understood to be its proven track record. There are a whole host of factors that influence the goodwill of a company. Such factors are more likely to include the capital requirement nature of business, market situation, reputation of owners and profit trends, among others. An example of goodwill :- When company X purchases company Y for greater than the fair value of company X’s debts and assets,