Which of the following is true in relation to goodwill?

Question

KollegeApply · Accepted Answer

Goodwill is an intangible asset. Explanation: • Not a fictitious asset: Fictitious assets are losses not written off (like Preliminary Expenses), but goodwill represents future economic benefits. • Not a current asset: Goodwill cannot be converted into cash quickly; it is not held for short-term trading. • Not a wasting asset: Wasting assets lose value due to physical use (like mines, patents with fixed life). Goodwill does not “waste” in this sense, though it may fluctuate. • Goodwill is an intangible asset: It has no physical form but provides value to the business (brand name, reputation, customer loyalty).

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