Question

State the following statement is true:

Goodwill will be raised in the books of the firm on its dissolution.

Answer 1

This statement is false.

Explanation:

Goodwill is generally not raised on the dissolution of a firm. Instead, during the dissolution process, goodwill is written off and its value is either shared among the partners or adjusted in their capital accounts, based on the agreed terms in the partnership deed. The firm’s goodwill is not an asset that is carried forward after dissolution, but its value is typically realized or adjusted before the final closure of the firm’s accounts.