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How is goodwill classified as an asset in accounting?

Answer and explanation

Correct answer: Intangible asset

Goodwill represents the value arising from a firm’s reputation, customer loyalty and ability to earn higher profits. It has economic value but no physical form, so it is classified as an intangible asset. A tangible asset has a physical form, while a current liability is an obligation payable within the short term. Exam tip: Reputation, brand value and goodwill are common examples of intangible assets.

Related tags

GoodwillIntangible AssetsPartnership AccountsAccountancyBasic ConceptsPartnership Accounts Basic ConceptsClass 12 Mcq

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