Question : Assertion (A): Goodwill requires adjustment at the time of reconstitution of a firm.
Reason (R): The nature and location of business do not affect the valuation of goodwill.
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: Assertion (A) is true but Reason (R) is false
Solution : Goodwill requires adjustment at the time of reconstitution of a firm. The nature and location of business affect the valuation of goodwill. Hence, the correct option is 3.
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