0
Goodwill is the value of reputation of a irm in respect of the profits expected in future over and above the normal rate of return, which other companies can earn. Over and above the normal rate implies that the firms capability to earn more profits when compared to other firms because of its good brand name, locational advantage, good customer relations or possession of a unique patent right. The impact of goodwill on the net income is that, as good will is amortized the amount of profits get reduced. This further reduces the balacne of reserves and surplus amt in the balance sheet.
Wiki User
∙ 14y ago
Add your answer:
Earn +20 pts
How do debtors affect the income statement?
iincreases the net profit
How does income taxes affect net cash flow?
An individual's net income is used to determine how much income tax is owed. ... cash flows from operating activities ...
Why does paying off accounts payable not affect net income?
Paying off accounts payable not affect net income because it is charged to income statement already at time of purchases now it is just the payment of cash which charge cash only.
How will you deal with goodwill when new partner brings his share of goodwill in cash?
as an income
Valuation of goodwill?
Goodwill means the reputation of a Business concern which enables businessmen to earn extra profit, as compared to other concern. Goodwill means various advantages of reputation and connections of a business. Mr. Kohler defines goodwill as "the current value of expected future income in excess or normal return on the investment in net tangible assets:"
Why would there be negative goodwill on a purchaser's income statement rather than the seller's income statement?
Goodwill can be negative and arises where the net assets at the date of acquisition, fairly valued, exceed the cost of acquisition. Negative goodwill is recognized as a liability.
Does rent expense affect net income?
Yes all expenses reduces the net income so does rent expense also reduce the net income of company.
How do debtors affect the income statement?
iincreases the net profit
How does income taxes affect net cash flow?
An individual's net income is used to determine how much income tax is owed. ... cash flows from operating activities ...
How does employee number affect company's net income?
If the company's gross income does not increase, but you add employees, then the next reporting period most likely will show a loss of net income. However, if adding employees causes a company to increase revenues, financial reports might show an increase in net income. This question needs more specific information to provide a specific answer about how employee number will affect net income.
Why does paying off accounts payable not affect net income?
Paying off accounts payable not affect net income because it is charged to income statement already at time of purchases now it is just the payment of cash which charge cash only.
How does dividends affect net income?
Answer:Dividends are a distribution of net income. That means dividends is not included in the calculation of net income. Dividend payments do affect net income indirectly. If a company pays a dividend, cash is reduced. This cash can no longer be used to generate profits. That is why 'cash cow' companies pay out the bulk of their profits as dividends (few or no new investment opportunities available) and growth firms retain all profits.
How will you deal with goodwill when new partner brings his share of goodwill in cash?
as an income
Valuation of goodwill?
Goodwill means the reputation of a Business concern which enables businessmen to earn extra profit, as compared to other concern. Goodwill means various advantages of reputation and connections of a business. Mr. Kohler defines goodwill as "the current value of expected future income in excess or normal return on the investment in net tangible assets:"
Formula for net income?
Net income percentage = Net income / Revenue
Is goodwill balance or income statement?
balance
Which section of the income statement does not report net of income taxes or net of income?
Trading account statement does not report net of income taxes or net of income.
