Accounting Standard-26 prohibits the recognition of self generated:

Goodwill

The correct answer is option 1- goodwill.

Accounting Standard-26 prohibits the recognition of self-generated goodwill.

Accounting Standard 26 implies that Self-generated goodwill is not accounted for in the books and shown as an asset. Thus if self-generated goodwill be debited to goodwill account it should be written - off in the same financial year and should not be shown as an asset in the balance sheet. Alternatively value of goodwill may be adjusted by deducting new partners' current account and crediting in their sacrificing ratio. The effect under both the methods is same.