Practicing Success
Goodwill exists only, if the Partnership firm earns: |
Normal profit Super profit Incurred loss Average profit |
Super profit |
The present value of a firm’s anticipated excess earnings” or as “the capitalised value attached to the differential profit capacity of a business”. Thus, goodwill exists only when the firm earns super profits. Any firm that earns normal profits or is incurring losses has no goodwill. |