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What Is Goodwill ? Why should a new Partner be called upon to pay for Goodwill ?
Asked by Anmol Kumar Last Modified
Answer 
Gunalan Venugopal
Online tutor - M.Sc (IIT),M.Ed - Physics -25 yrs Experienced - Chennai TN - Micro-teaching
Goodwill is the value of a business entity not directly attributable to its assets and liabilities, and is earned by providing quality, consistently and acts as a brand. It is not reflected in the P&L statement but shows the confidence of the market in the name of the enterprise.
Any new partner is asked to pay for goodwill as it's a 'future value' of the business and needs to be accounted for any investment which will reflect the true valuation of the enterprise.
Suman Chakraborty
Cloud & devops trainer: Kubernetes certified (CKA,CKAD), Docker, Pivotal Cloud Foundry, Azure
The term "Goodwill" relates to business matters and is defined as an intangible entity that comes when a company acquires new business into any field. A new partner should be paid upon because it is looked like a kind gesture as he will bring more business and sho existing company must share the goodwill of the profit earned to date. Hence old partners in business want a contribution from a new partner for their compromise in the value of goodwill for a new partner. The new partner would compensate to former partners in their sacrificing ratio.
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