Assertion (A): Goodwill is an intangible but not a fictitious asset. Reason (R): Goodwill is an intangible asset because it does not have a physical existence but it is a valuable asset because it is helpful in earning excess profits. In the context of the above two statements, which of the following is correct?

Question

KollegeApply · Accepted Answer

Both (A) and (R) are true and (R) is the correct explanation of (A). Explanation: Goodwill is an intangible asset because it does not have any physical existence, yet it holds value as it helps in earning excess profits for the business. It is not a fictitious asset since fictitious assets have no real value, whereas goodwill has measurable worth and can be sold along with the entire business.

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