Question

Mr. Vishwanath established a travel agency. Over the years the travel agency earned high reputation. Mr. Vishwanath considers the value of goodwill of his travel agency at Rs. 50 lac. He want to recorded the value of the goodwill in the books of accounts. Can he do so ?

Answer 1

No. Only the purchased goodwill can be recorded in the books of accounts. As per Accounting Standard 26 (Intangible Assets), self generated goodwill is not recorded in the books of accounts because consideration in money or moneys worth has to been paid for it.