Question

What is meant by Self-generated Goodwill?

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Solution

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Self-generated or Inherent Goodwill is the value of business in excess of the fair value of it's net tangible assets. It arises over a period of time due to the good reputation of the firm. A cost cannot be placed on this type of goodwill. It is never recorded in the books of accounts. The valuation of this type of goodwill depends entirely on the judgement of the valuer.

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