Question : Assertion (A): Goodwill is as an intangible asset. Reason (R): The goodwill is calculated by multiplying the past average profits by the number of years during which the anticipated profits are expected to accrue.
Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Option 2: Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A)
Option 3: Assertion (A) is true but Reason (R) is false
Option 4: Assertion (A) is false but Reason (R) is true
Correct Answer: Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A)
Solution : Goodwill is as an intangible asset and it is not a fictitious asset. Hence, the correct option is 2.
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Question : Assertion (A): A new business is likely to have lesser goodwill. Reason (R): Goodwill is an intangible asset.
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